For the previous trading day, the pound / dollar currency pair showed a high volatility of 114 points, as a result of having a wide amplitude focusing on the base point of the former support. From the point of view of technical analysis, we see that the local overheating of short positions led to a rollback towards 1.2248, but it was unable to fully return customers, and a strong reservoir of short positions resumed the downward move, updating at least the current year. As discussed in the previous review, traders stayed away from the market, citing local overheating of short positions. The clusters that we saw at the beginning made it possible to temporarily enter long positions, in the rollback phase, where at the first predicted mark of 1.2250, a partial exit occurred with the movement of the restrictive order to break-even. On the next move, we already see as a post factum, but we'll talk about it a bit later. Considering the trading chart in general terms (daily timeframe), we see that the global downward trend continues its march, where the clock frequency is still in the "Impulse" phase. The theory that the pound will fall even lower remains as never before, but all that we need is their time.
The focus of the previous day in terms of the news background, of course, was the meeting of the Federal Commission on Open Market Operations, where it was decided to lower the refinancing rate by 25 basis points from 2.50% to 2.25%. The very decision to cut the rate was not a surprise for the market, since even at the June meeting, the head of the Fed prepared the market for such an event. Let me remind you that the rate was lowered for the first time since 2008, the question still goes this way, where is the long-awaited reaction of the dollar in the form of a decline? The reason for such an extraordinary move of the American currency lies precisely in the press conference, where Mr. Jerome Powell masterfully spread out "hamsters" in the form of such statements as further actions will depend on changing data and changing picture of risks. That is, the Fed simply continues to monitor statistical data on the labor market, inflation,
It focuses specifically on another decline this year, as many had hoped, did not receive from the Fed chairman, thus the dollar continued to gain new positions in the market.
By tradition, we complete the information and news background with our favorite UK & EU divorce process. This time, there was news that the Ministry of Finance of Great Britain will allocate 2.6 billion dollars to prepare the country for a tough exit. This amount will be divided into two parts: the first, 1.34 billion, will be allocated to vital sectors of the economy; The second part, 1.22 billion, will be allocated to the regions, including Wales, Scotland and Northern Ireland.
Enough of these funds, of course not, unless, of course, they would not allow them to stimulate advertising, reassuring the population, as they are done with 100 million pounds.
Today, the meeting of the Bank of England is the focus of attention, where, of course, the rate will remain the same, while maintaining the parameters of monetary policy. A more interesting development is expected at a press conference where the head of the Bank of England Carney, as always, will talk about the consequences of a hard exit from the EU, which could put pressure on the British currency. In terms of statistics, we are waiting for indicators on applications for unemployment benefits in the United States. We are waiting for the growth of applications in total by 10K: Repeated on 2K and Primary on 8K.
14:00 MSK - Meeting of the Bank of England
14:30 MSK - Speech by the Head of the Bank of England Kearney
Further development
Analyzing the current trading chart, we see a clear price fixing below the level of 1.2150, with a point of temporary support 1.2100. It is likely to assume that the formation of a time amplitude within 1.2100 / 1.2150 is possible, which will serve as an accumulation, after which the focus turns to fixation points, where in the case of a descent lower than 1.2100, it is possible to assume further movement towards the psychological level 1, 2000. Traders, in turn, are already merging into short positions as soon as we have gone below the level of 1.2150, with the prospect of further decline.
Based on the available information, it is possible to decompose a number of variations, let's specify them:
- Buy positions are considered in the case of price fixing higher than 1.2160, with the prospect of a move towards 1.2200
- If we still do not have positions for sale, it makes sense to wait for a clear fixation lower than 1.2100, with the prospect of a move towards 1.2000 (+/- 20p).
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short, intraday and medium term, tend to decline further, keeping the overall bearish market background.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(August 1 was based on the time of publication of the article)
The current time volatility is 61 points, which is already a considerable value for a given time segment. It is likely to assume that due to the holding information background, volatility can continue to grow, overcoming the average daily figure.
Key levels
Zones of resistance: 1.2150 **; 1.2350 **; 1.2430; 1.2500; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300
Support areas: 1.2000; 1.1700; 1.1475 **
* Periodic level
** Range Level
*** The article is based on the principle of conducting a transaction, with daily adjustment.
