4-hour timeframe
Technical data:
The upper channel of linear regression: direction – upward.
The lower channel of linear regression: direction – upward.
The moving average (20; smoothed) – sideways.
CCI: -137.1681
The British pound paired with the US currency continues to show weak volatility for itself and a weak downward movement. Still, the technical picture of the pair looks as if there is no trend, but there is a flat. Thus, trading the pair now is not entirely appropriate. Nevertheless, a certain part of traders remains in the market, respectively, counts on something. During yesterday, no macroeconomic report was published, which would concern the GBP/USD pair. In the UK, fundamental calm generally continues. The UK Parliament, from where the news constantly came, has been dissolved and now traders will witness interesting information about the preparation of different parties for the elections on December 12, about various opinion polls designed to find out which party has the best chance of winning, and so on. However, all this information will not make any difference to the British currency and its traders. The most interesting thing is those market participants have not too much reaction to American statistics. Today, finally, there will be an event that can significantly affect the movement of the currency pair. It could. However, for some reason, it seems that today we are waiting for sluggish and boring trades. Why so? Because the meeting of the Bank of England promises to be completely passable. Let's try to remember the last time the British regulator changed the parameters of monetary policy? A long time ago. When was the last time the views of members of the monetary committee on changes in the key rate differed? A long time ago. When was the last time we were surprised by Mark Carney's rhetoric and commentary? At least a year ago, when his fears about the impact of the "hard" Brexit on the UK economy were still taken into account by traders. What is expected today? Changes in monetary policy – no. Change in the balance of votes among members of the monetary committee – no. Even Mark Carney's speech, which could potentially mean important new information, isn't either, since what can the head of the Bank of England say if he has nothing to react to now? Brexit is again in limbo. The country has entered the phase of regular parliamentary elections. It makes no sense to save the pound now. Thus, we believe that nothing interesting will happen at the meeting of the regulator today, and the surge in volatility, if it happens, it will be short-lived and not strong. The only thing the Bank of England can do is lower its economic forecasts for 2019 and 2020.
Thus, the British pound will remain in limbo and continue to wait for the market to return to the majority of traders who took a break after working on the ascent of the pair by 800 points up. Theoretically, such a lull can persist at least until December 12. The factors that would ensure further growth of the British pound is not even theoretical. And traders are in no hurry to sell the British currency, although, from our point of view, this is what they should be doing now. Thus, from our point of view, the pound now has two ways – either sideways or down. From a technical point of view, the bulls failed twice to overcome the area of 1.2970 – 1.3000, which also speaks in favor of a possible decline in the currency pair. Both channels of linear regression are directed upwards, but the moving average line is directed sideways, and the price is below it. And as we know, it is with the overcoming of the moving that the formation of a new trend begins.
Nearest support levels:
S1 – 1.2848
S2 – 1.2817
S3 – 1.2787
Nearest resistance levels:
R1 – 1.2878
R2 – 1.2909
R3 – 1.2939
Trading recommendations:
The GBP/USD pair has settled below the moving average line, but what is happening in the market now still falls under the definition of "flat". Formally, traders can consider selling the pound with targets of 1.2817, 1.2787, and 1.2756. However, we would not recommend doing this in large volumes, as both trend channels of linear regression remain directed upwards, and the volatility of the pair is now quite low. However, it is more preferable to the downward movement of the pair in the coming days.
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 line of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the regression window of the indicator.
The moving average (20; smoothed) – blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com