Over the past trading day, the pound / dollar currency pair showed a low volatility of 78 points, resulting in a slight recovery process. From the point of view of technical analysis, we see that the recovery process led to the quotation being able to focus within the lower boundary of the previously formed accumulation of 1.2430 / 1.2500, where stagnation actually occurred in the form of narrow consolidation.
As discussed in the previous review, speculators carefully analyzed the lower border of 1.2430 for a breakdown, where I do not exclude that some traders entered the short positions, but with an incomplete trading volume. In fact, transactions are still being saved on the market, having a stop loss safety order.
Considering the trading chart in general terms (the daily period), we see that the oblong correction has not gone away, and the recovery process, to which many refer, has not yet occurred. The resistance point in this case is a fairly wide range level of 1.2500, and the pivot point of the correction course displays the historical level of 1.1957, although it is still far from it, and there are a number of levels on the way that will definitely interact with the quote. Regarding the trend, I think it is too early to talk about a change in the main movement. An oblong correction, of course, slowed down the downward trend; nevertheless, it remains in global terms.
The news background of the past day contained preliminary PMI data for the United States, where, as expected, the index of business activity in the manufacturing sector grew from 50.7 to 51.0. On the other hand, the index of business activity in the services sector did not slightly coincide with the forecast, but still showing growth from 50.7 to 50.9. The reaction of the dollar against the pound to the flow of statistics was practically not felt.
The information background of the market is collapsing with the bankruptcy of the oldest British company Thomas Cook, where hundreds of thousands of tourists cannot return home, and the British government urgently allocates about $ 750 million for the operation to return the British to their homeland. According to conservative estimates, Thomas Cook has accumulated a debt of £1.7 billion. Returning to our beloved Brexit, where EU chief negotiator Michel Barnier said at a press conference in Berlin that, given Britain's current position, it's hard to imagine how we can achieve a legally functional solution that will meet all the goals of backstop. In fact, Europe is ready to consider the UK proposals regarding back-stop, but all actions are similar to the formal consideration, since the EU's exit conditions indicated and further actions will be in accordance with existing regulations. In turn, Prime Minister Boris Johnson is skeptical of the upcoming talks with European leaders in New York, and believes that a breakthrough should not be expected. Let me remind you that Johnson should meet with the leaders of the EU countries on the sidelines of the UN General Assembly in New York.
Today, in terms of the economic calendar, we only have the CB Consumer Confidence Index for the United States and the S & P / CS Composite-20 composite housing price index, not including seasonal fluctuations. The data are not so important in themselves, and the changes in them are not significant. Thus, the main focus will be on the information background, today the British Supreme Court must decide whether the suspension of parliament is lawful. A more interesting point is the reaction of Boris Johnson to the court decision, since it is not yet clear whether he will answer the decision or ignore it. As you understand, if the Supreme Court considers that the actions of the Prime Minister violated the law, the court may return everything back.
Further development
Analyzing the current trading chart, we see that a breakdown of accumulation of 1.2430 / 1.2500 has led to the formation of consolidation within 1.2412 / 1.2450, where accumulation is still going on. This kind of stop is a pretty good platform, and I don't rule out a local outburst. The speculators, in turn, already have short positions with an incomplete trading lot, but at the same time they carefully analyze the accumulation [consolidation], since it is possible to work on a local surge, that is, the analysis is carried out in the form of firing points relative to the consolidation framework.
It is likely to assume that the existing stagnation is short-term in nature, and in the near future, a splash is worth waiting for. Work is underway regarding the existing consolidation framework 1.2412 / 1.2450.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in case of a shot higher than 1.2450.
- Sell positions, if we have, it is possible to hold or set a stop above the upper frame of consolidation. Further short positions are considered lower than 1.2410.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators signal a versatile interest. The short-term period signals an upward interest due to fluctuations in the consolidation. The intraday perspective reflects the process of quotation recovery. Mid-term perspective displays a long-term correction.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 24 was built taking into account the time of publication of the article)
The volatility of the current time is 20 points, which is an extremely low value. It is likely to assume that in the case of a breakthrough of consolidation, volatility will increase significantly. At the same time, the informational background of the current day can fuel the interest of speculators.
Key levels
Resistance zones: 1.2500 **; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2350 **; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment
