From the point of view of a comprehensive technical analysis, what happened was what many were waiting for, the return of the price back to the psychological level of 1.3000, from where it all started. In fact, in one trading week, the quotes managed to go over 500 points, leaving behind the entire impulsive upward movement and replacing it with an inertial, but in the opposite direction. Analyzing December, one is amazed at the scale of jumps and potential profit, where the tactics of work were not complicated, and the speed of the formation of jumps did not force traders to stay in positions for too long. I think that we are still waiting for the continuation and that 2020 will not be boring. Continuing consideration of the existing fluctuations, traders agree that such a rapid return of prices back to the long-playing flat 1.2770 / 1. 3000 suggests that bearish interest still prevails in the market. as well as indecision in terms of changing global trends. That is, the chance of the price returning back to 1.2770 / 1.3000 has reached a high coefficient, and only a local information background can make adjustments to this scenario.
In terms of volatility, we see that the assumption of acceleration, after the conditional stagnation of the environment, coincided 100%. The quotes managed to draw an amplitude of 142 points from low to high, and the movement was holistically directed downward. In turn, speculative interest continues to gain new heights, as evidenced by the volatility and structure of trading candles.
Analyzing the past hourly chart, we see that the morning consolidation, with an extremely low amplitude, confirmed the willingness of market participants to take action where price jumps began to appear after the start of the European trading session. In fact, 80% of the movement was directed downward.
As discussed in the previous review, many speculators adhered to a risky, but still profitable tactic of holding short positions, which ultimately paid off. Within the psychological level of 1.3000, profit-taking occurred due to the risk of a rebound from the control level.
Considering the trading chart in general terms [the daily period], we see that in the existing upward trend the prerequisites for a fracture arise, but confirmation of this will only come when the quotation returns to the area of 1.2770 / 1.3000. In terms of trends, we see that 2019 was a big V-shaped formation, which is in the structure of the global downtrend.
The news background of the past day contained data on retail sales in the UK, where there was a more significant slowdown than previously expected, from 3.1% to 1.0%, [forecast was 2.1%].
Market reaction to statistics was in the phase of a general weakening of the pound.
After the statistics, happened the meeting of the Bank of England, where, without further surprise, the interest rate was left at the same level which is at 0.75%. At the same time, two out of nine members of the Monetary Policy Committee, Jonathan Haskel and Michael Saunders, respectively, once again voted to reduce the rate from 0.75% to 0.5%, arguing that the growth of the British economy is still weaker than expected while the labor market is cooling.
At the same time, during the last meeting, it was decided to elect the new head of the Bank of England, Andrew Bailey, the current head of the Office of Financial Regulation and Supervision of the United Kingdom. Let me remind you that Mark Carney will leave his post on January 31, 2020.
In terms of informational background, we had the official opening of the session of the new British parliament, where the Queen of Great Britain, Elizabeth II, addressed the deputies. The Queen welcomed the new House of Representatives, and also called a number of bills proposed for consideration by the government.
Prime Minister Boris Johnson, in turn, said during the first parliamentary meeting that it was time to implement the promises during the election campaign.
"We must justify the trust of those who made it here. We must solve the problems that the queen spoke about in her speech. The main lesson of this election campaign, the message that I heard in different parts of the UK, is not only that people want their government to complete the Brexit story, although this too, they want us to move the country forward. "Johnson.
What the Labor leader Jeremy Corbyn criticized, stating that Johnson has now intentionally resurrected the Brexit threat without a deal. This can knock down the industry and adversely affect employment. And this threat is now included in the bill on the country exit from the EU. The Prime Minister has repeatedly demonstrated that his priority is an agreement with Donald Trump.
In fact, this isn't so surprising as Corbyn spent the entire election campaign in the same passage.
Today, in terms of the economic calendar, data on Britain's GDP is expected to decrease from 1.3% to 1.0%, which will put local pressure on the pound. In the afternoon, data on the GDP of the United States will be released, but there is also a decrease from 2.3% to 2.1%, which to some extent can restrain the persistently strengthening of the US dollar.
At the same time, the Brexit deal, which is likely to be approved by 99%, is being submitted to the British Parliament today. I'm not sure whether the market will react to such a grand event, even during the election, the deputies made a promise to Johnson that they would vote for approval.
"Today we will fulfill the promise we made to the people and get a vote on Brexit, on Christmas Day," Johnson said
The upcoming trading week in terms of the economic calendar contains only data on orders for durable goods, and nothing more. It is worth considering that in connection with the holidays the market will not work on December 25, but on 24 and 26 trading volumes will also be reduced, which will affect the dynamics of the market.
The most interesting events displayed below --->
Monday, December 23
USA 12:30 Universal time - New Home Sales (Nov): Prev 733K ---> Forecast 728K
Tuesday, December 24th
USA 13:30 Universal time - Orders for durable goods (Nov): Prev 0.5% ---> Forecast 1.9%
Further development
Analyzing the current trading chart, we see that the psychological level of 1.3000 plays a support, where traders, due to risk, fix short positions and work locally on the rebound. In fact, there are no sharp changes in quotes, which cannot but rejoice the supporters of the bearish move, since even in the case of a small rollback, there will be a chance of a breakdown of the level of 1.3000. In terms of volatility, there is a chance of local acceleration, just at the breakdown phase of the level of 1.3000, as well as the acceleration of speculative positions.
By detailing the per minute portion of time, we see a characteristic stagnation / pullback, where the amplitude of the oscillation is still extremely small.
In turn, traders, as mentioned above, recorded trade deals, with the risk of a rebound and observe the behavior of quotes and points of possible price fixations below the control level. In turn, speculators are trying to make money on a rebound from the level, opening local long positions.
Having a general picture of actions, we can assume that while temporary stagnation / rollback looks like a realistic development of the plot, it's worthwhile to be vigilant and carefully analyze the area of 1,2990-1,2980 for clear price fixations. In fact, there is still a possibility of a further price drop.
Based on the above information, we derive trading recommendations:
- We consider purchase positions in case of price fixing higher than 1.3050 / 55.
- We consider selling positions in case of price fixing lower than 1.2885-80.
Indicator analysis
Analyzing a different sector of timeframes (TFs), we see that the indicators' indicators in most of the time sections retain downward interest. At the same time, short-term segments signal support, alternately reflecting purchases.
Volatility per week / Measurement of volatility: Month; Quarter Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(December 20 was built taking into account the time of publication of the article)
The current time volatility is 32 points, which is a low value for this time section. It is likely to suggest that, against the background of the information flow, acceleration may occur along with general market ticks.
Key levels
Resistance zones: 1.3180 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1,3000; 1.2885 *; 1.2770 **; 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
