Overview of GBP/USD on October 1st. Forecast according to the "Regression Channels". Traders fear the implementation of the

4-hour timeframe


Technical data:

The upper channel of linear regression: direction – sideways.

The lower channel of linear regression: direction – up.

The moving average (20; smoothed) – down.

CCI: -86.8173

Over the past day, no interesting reports from the UK Parliament have been received. Boris Johnson's secret plans to withdraw the country from the European Union on October 31 boil down to the fact that the EU itself will refuse to grant a delay to the UK. In that case, Johnson would be "clean" before the law, which obliges him to ask for a reprieve if his government is unable to agree on a "deal" before October 19. However, Johnson should exactly ask the EU to postpone the date of Brexit and, of course, it should be an official request, fixed on paper, and not a telephone conversation with Jean-Claude Juncker. However, Boris Johnson continues to hand out interviews to the right and to the left in which tirelessly declares that Brexit will take place by all means on October 31, and he will ask the European Union not to grant a delay. This is the uncertainty that discourages traders from buying the British pound. Now, as for most of the 3 years, no one can say with high probability what exactly will end this entire epic. In such a situation, forex market participants can only wait for new information. In the meantime, this information is not available, most traders prefer to get rid of the British currency amid fears that the Prime Minister somehow still implements a "hard" Brexit.

Also, the pound begins to be dependent on macroeconomic statistics from the UK again. Yesterday's GDP report for the second quarter is contradictory. On the one hand, GDP in annual terms showed an increase of 1.3%, with a forecast of +1.2% y/y, but on the other hand, a quarterly decrease in GDP by 0.2% was recorded. Today, the index of business activity in the manufacturing sector will be published and nothing good can be expected from it. The past value of the indicator is 47.4, the forecast is 47.0. That is, experts do not expect the situation in the manufacturing sector to improve, respectively, there are practically no hopes that business activity will suddenly rise to 50.0. Traders can completely ignore US business activity indexes, since Brexit, its consequences and the current "figures" of the state of the economy are of great importance for the pound.

Topics with possible impeachments to Boris Johnson and his best friend Donald Trump are still not particularly concerned about market participants. Even it seems that traders do not see anything dangerous in the litigation involving the leaders of the US and the UK. Is it because Boris Johnson and Donald Trump are ambiguous leaders and the negative impact on the US and British economies from their activities are more than positive? But, one way or another, while these topics are not particularly interested in traders, they may be interested in the processes move from the "conversational" stage to the stage of active opposition actions.

The technical picture of the pound is now similar to the currency pair EUR/USD. The pound continues its downward movement based on fundamental factors and traders' concerns about the outcome of the entire Brexit process. Thus, today we are waiting for another fall in the British currency.

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 October 1. 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 upward. 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 the illustrations:

The upper channel of linear regression – the blue lines of the unidirectional movement.

The lower channel of linear regression – 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