Review for the "Regression Channels" system for GBP/USD pair on May 27: rexit party won the European Parliament election

4 hour timeframe


Technical details:

Senior linear regression channel: direction - down.

The younger linear regression channel: direction - down.

Moving average (20; smoothed) - sideways.

CCI: 99.6865

Well, Theresa May resigns and 7 politicians, including Boris Johnson, are immediately marked in her place. Then, elections to the European Parliament are over. In general, Eurosceptics gained more than 100 places out of 751, and Nigel Faraj's Brexit won the game from the UK. As we already wrote in the review about the euro, there was no particular reaction of the market to the election results. Traders are not ready to make long-term plans and try to guess what this political situation will lead to. Also, market participants do not want to guess who will be the next prime minister and how Brexit will end. Thus, sales of the pound against the background of complete uncertainty for Brexit ended and the pound rebounded slightly against the background of weak US macroeconomic statistics in the past two days. From a technical point of view, euro sellers still hold the initiative in their hands until it was possible as the above movement of the pound/dollar pair to gain a foothold. Thus, bears can again go on the attack on the bulls at any time, which still have nothing to repel. On the first trading day of the week, there is not a single planned important publication. Thus, there is every reason to assume that volatility will be low today. However, given the resignation of Theresa May, new messages from the UK regarding the new prime minister and the prospects for Brexit may cause a surge in activity among traders with a low volatility today.

Nearest support levels:

S1 - 1.2695

S2 - 1.2634

S3 - 1.2573

Nearest resistance levels:

R1 - 1.2756

R2 - 1.2817

R3 - 1.2878

Trading recommendations:

The GBP/USD pair continues the upward correction. Thus, it is now recommended to wait for its completion and then resume sales of the pound sterling with targets of 1.2634 and 1.2573.

Longs are recommended to be considered only after the pair fixed above the movement with targets at 1.2817 and 1.2878. However, the bulls remain fairly weak at the moment.

In addition to the technical picture, traders should also take into account the fundamental data and the time of their release.

Explanations for illustrations:

The senior linear regression channel is the blue lines of unidirectional movement.

The junior linear channel is the purple lines of unidirectional movement.

CCI is the blue line in the indicator regression window.

The moving average (20; smoothed) is the blue line on the price chart.

Murray levels - multi-colored horizontal stripes.

Heiken Ashi is an indicator that colors bars in blue or purple.

The material has been provided by InstaForex Company -