GBP/USD. November 10. Results of the week. The UK is approaching elections that can be completely meaningless

4-hour timeframe

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Amplitude of the last 5 days (high-low): 67p - 58p - 53p - 84p - 54p.

Average volatility over the past 5 days: 63p (average).

The British pound continued a downward movement that remains fairly weak last Friday, November 8. The average daily volatility of the pair is now about 60 points, which is quite a bit for the pound. No important macroeconomic reports were published on Friday in the UK, nor was there any important news regarding Brexit or the upcoming parliamentary elections. In such a situation, the low volatility of the pound/dollar pair is understandable, and the downward movement is justified by the general negative environment for the pound sterling.

In principle, everything that was said on the EUR/USD article also applies to the British currency. If the EU has a huge number of problems associated with low statistical indicators and a slowdown in the economy, then the same thing is present in the UK, only multiplied by the political crisis and still unresolved Brexit. The pound has tended to increase over the past two months, but not because there were real reasons for ending the "divorce" between the EU and Britain in an orderly deal, but because a new batch of rumors entered the market that the parties were close to an agreement . Now, when it became clear to absolutely everyone that the new agreement between Boris Johnson and the European Union was worthless until it was ratified by Parliament, the British currency again fell under the sale of traders. Because just as the "hard" Brexit left the immediate future, the orderly Brexit is also moving away. The country will be in limbo for another five weeks, preparing for the elections. According to many experts, these elections will be the most difficult in the last few decades of the country. The usual and normal practice of parliamentary elections implies that the electorate selects a candidate for the party whose views on governing the country are most to his liking. Now, residents of the UK will have to choose not only by this principle, but also by the principle of Brexit, since each party supports its own Brexit scenario. For example, you can approve of the policy of Conservatives, but you do not want to leave the EU. Then who to vote for? So it turns out that the election results, despite all the ratings and opinion polls, can be completely unpredictable. Accordingly, the future of the country and Brexit is now impossible to predict.

In addition to the fact that neither political parties, nor residents of the UK can unequivocally answer the question "is it worth leaving the EU?", Some senior politicians and officials also regularly speak out about the divorce with the European Union and their opinions are also completely opposite. For example, former parliamentary speaker John Bercow calls Brexit a big mistake. Since he is no longer a speaker, he may not remain neutral, so the politician honestly expressed his opinion on this issue, which was to be kept secret in recent years. Bercow said: "This (Brexit) does not help the UK. If they ask me if Brexit is in our interests, the honest answer is no. I consider Brexit to be the biggest foreign policy mistake of the post-war period. "

Thus, we believe that the British currency will continue to be prone to fall. It simply has no other options at the moment. In the best case, traders will not force events and will wait until the completion of the election, after which they will draw conclusions and build new trading strategies. However, it's about a month before the election, all this time the pound can't just wait and stand in one place. Volatility is now significantly reduced, but the British pound paired with the dollar still needs to move somewhere. This "somewhere" is likely to be down, back to multi-year lows. Well, if the election results do not give the advantage of any of the parties, then the downward trend for the pair pound/dollar will continue.

From a technical point of view, all indicators are now directed downward, so there are no questions about which positions to open. All lines of the Ichimoku indicator, Bollinger Bands, MACD, all show a downward direction. Given the fact that macroeconomic data from the UK also leaves much to be desired, they do not even provide short-term support. Well, a meeting of the Bank of England this week made it clear that in the coming months, the key rate could be lowered. Needless to say, there will be an additional "bearish" factor for the pair?

Trading recommendations:

GBP/USD is in a downward movement, which already shows all the signs of a trend. Thus, long positions are not relevant now; it is recommended to trade for a fall with targets at 1.2736, 1.2716 and 1.2667.

Explanation of the illustration:

Ichimoku indicator:

Tenkan-sen is the red line.

Kijun-sen is the blue line.

Senkou Span A - light brown dotted line.

Senkou Span B - light purple dashed line.

Chikou Span - green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD indicator:

Red line and bar graph with white bars in the indicator window.

Support / Resistance Classic Levels:

Red and gray dotted lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movement options:

Red and green arrows.

The material has been provided by InstaForex Company - www.instaforex.com