GBPUSD - BREXIT, COVID and investor fear

The Brexit separation process is still going on in the form of endless negotiations. The parties are trying hard to find a compromise on the fixed issues of fishing and a level playing field but, as before, everything is dead weight.

The head of the European Commission, Ursula von der Leyen, said during an online conference today that the negotiations are very difficult and that the next few days will be decisive. The EU does not need a deal at any cost so the outcome of the negotiations will be clear within the set time.

On Monday, French European Affairs Minister Clement Bohn said he hoped to see an agreement "in the next few days," but despite the positive mood, Bohn said the EU and the UK were still "very far" from an agreement.

He said there were two key differences: access to UK fishing waters and the so-called equal playing field for business. These issues still remain unresolved.

In fact, we are in limbo. Investors are in fear of uncertainty and speculators are ready for possible local price jumps.

The second important background is COVID, which sets the mood of investors and speculators. The national quarantine in Britain is coming to an end this week but restrictive measures and a three-level infection assessment system are replacing lockdown.

British Prime Minister Boris Johnson said that pubs/bars that serve only drinks will be closed after the full lockdown is lifted following the new rules. This again scares investors, which affects the value of the Pound.

In terms of technical analysis, as before, there is a side channel of price levels at 1,3300 // 1,3350 // 1,3400. The quote consistently bounces off these specified boundaries.

In fact, market participants took a pause of 100 points in the form of a range and will continue until there is clear information on the Brexit separation process.

As for the market dynamics for November 30, there are signs of speculative jumps, but the daily volatility is still at a low level of 78 points, which is 33% below the average level.

Analyzing the dynamics of volatility in November, you can see that the average daily indicator is 106 points, which is 9.4% lower than the average level. In comparison with the dynamics for October, there is a slowdown in daily volatility by 12%.

November: Monday-87 points; Tuesday-167 points; Wednesday-223 points; Thursday-223 points; Friday-83 points; Monday-89 points; Tuesday-121 points; Wednesday-116 points; Thursday-122 points; Friday-91 points; Monday – 76 points; Tuesday – 86 points; Wednesday -70 points; Thursday – 82 points; Friday -49 points; Monday – 133 points; Tuesday – 87 points; Wednesday – 89 points; Thursday – 75 points; Friday – 91 points; Monday – 78 points.

Looking at the trading chart in general terms (daily period), you can see that in November the British Pound strengthened by more than 500 points (4%). As a result, almost the entire downward move was played out during the first half of September.

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Today, in terms of the economic calendar, data on house prices in the UK were published, where they recorded an increase from 5.8% to 6.5%. In addition, they published the final data on the index of business activity in the manufacturing sector, which also reflected the growth of the index from 53.7 points to 55.6 points.

The statistics are positive, but there was no market reaction.

Analyzing the current trading chart, you can see that during the Asian and European sessions, there was an active upward interest. As a result, the quote came to the upper border of the side channel 1.3300/1.3400, where a rebound occurred on a natural basis.

The downtrend was intense. In just a few hours, the quote fell to the area of 1.3315, where buyers were already expecting a rebound from the lower limit of the range.

It can be assumed that the scheme of working within the established boundaries will still be relevant for some time. Speculators are probably waiting for signals from London regarding the Brexit process and only after that will there be an exit from the range.

Work on the breakdown of a particular border is considered the most profitable because of the long accumulation process. It is worth noting that the breakout will be taken into account only after fixing the price outside of a particular border on a four-hour period.

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Indicator analysis

Analyzing different sectors of timeframes, it is clear that the indicators of the technical instruments on the minute and hour periods follow the trajectory of the side channel. In this case, it is signaling the purchase and sale, in accordance with the tact. The daily period works on a general upward movement, signaling a purchase.

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The volatility for the week / Measurement of volatility: Month, Quarter, and Year

The measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / and Year.

(December 1 was based on the date of publication of the article)

The dynamics of the current time is 89 points, which is 24% below the average level. The main acceleration is expected after the breakdown of one or another border of the range.

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Key level

Resistance zones: 1,3400*; 1,3480; 1,3600; 1,3850; 1,4000***; 1,4350**.

Support areas: 1,3300**; 1,3175(1,3200); 1,3000***; 1,2840/1,2860/1,2885; 1,2770**; 1,2620; 1,2500; 1,2350**; 1,2250; 1,2150**; 1,2000*** (1,1957).

* Periodic level

** Range level

***Psychological level

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