4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The upper channel of linear regression: direction – up.
The moving average (20; smoothed) – down.
CCI: -105.5947
At the weekend, representatives of the German Foreign Ministry explained that Berlin was not opposed to providing a new respite on Britain's exit from the EU. According to Heiko Maas, the main goal is to reach an agreement with London, a consensus. The German Foreign Ministry also noted that the new transfer requires "the prospect" of further progress in the negotiations and the procedure of "divorce". It is based on this opinion that France does not consider it right to grant London a new reprieve, as it does not see any constructive proposals regarding the "backstop". Maybe that's what Boris Johnson wants? Maybe he just drags on until the summit on October 17/18, at which again he will not offer anything interesting to Jean Claude Juncker and will hope that the EU leaders will not go on a new transfer date for Brexit, given the fact that the negotiations can not move from the "dead" point? We have already understood that Boris Johnson will look for workarounds for the Parliament's decision, which obliges him to ask for a delay. But maybe the EU itself will refuse to grant a reprieve if Johnson continues to show complete inaction on the issue of negotiations on the "deal" on Brexit? As there is no information from the UK government on this issue, it may be one of the possible scenarios.
In any case, in three weeks, we will know what the British Prime Minister is up to. In the meantime, we state the fact: the pound is under market pressure again, as the uncertainty on the outcome of Brexit has increased again, traders again do not know how everything can end, Boris Johnson leaves possible for the execution of half a dozen options. Thus, the next fall of the pound is expected and logical. As before, the British currency rose on positive emotions, expectations of traders regarding the transfer of Brexit, blocking the Parliament of "hard" Brexit, but now, when there is no Brexit transfer, no Brexit agreement, the danger is growing again.
Boris Johnson himself said on Sunday that he did not intend to resign and did not intend to ask EU leaders to postpone Brexit. How then to consider Johnson's proposal to the deputies to pass him a vote of no confidence? Correctly, it was made only for the sake of carrying out the early elections to Parliament which the Prime Minister achieves by all forces. Thus, we will witness at least 3-4 more weeks of "military actions" in Parliament.
The British pound, meanwhile, continues to fall non-stop. The euro has at least slightly adjusted, the pound – no. Today in the UK, data on GDP for the second quarter will be released, it is expected that in annual terms the growth will be 1.2%. Any value below 1.2% is almost guaranteed to cause new sales of the British currency. No important news is expected from overseas today.
Nearest support levels:
S1 – 1.2268
Nearest resistance levels:
R1 – 1.2299
R2 – 1.2329
R3 – 1.2360
Trading recommendations:
The GBP/USD pair continues its downward movement on September 30. Thus, traders are advised to continue buying the US currency with a target of 1.2268 and below. Short positions can be held until the Heiken Ashi indicator turns up. It is not recommended to buy the pound/dollar pair now.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – the purple line of the unidirectional movement.
CCI – the blue line in the indicator regression window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
The material has been provided by InstaForex Company - www.instaforex.com