4-hour timeframe
The amplitude of the last 5 days (high-low): 110p - 89p - 59p - 134p - 192p.
Average amplitude for the last 5 days: 117p (94p).
The British pound sterling on Thursday, January 3, is also recovering from yesterday's collapse. The collapse, by the way, continued even tonight in the Asian trading session. Having broken through the previous local low, sales of the pound sterling and the purchase of the dollar stopped, since such a strong downward movement was groundless. The pound, of course, remains extremely weak due to uncertainty on the Brexit issue, but not enough to lose almost 400 points out of the blue. Therefore, we believe that the recovery of the British currency will continue in the coming days. Today, the pound was supported by the report on the ISM index in the US manufacturing sector, which turned out to be a failure. Help turned out to be small, but still. The most important thing for the pound now is that traders have not fixed below the previous local low. Thus, we get something like a "double bottom" and hope for the strengthening of the pound in the future. Of course, the key influence on the UK currency will not have a technique, and the vote of the British Parliament on Brexit. The main thing up to this point is to stay above 1.2480. Then there will be chances to end the downtrend. From a technical point of view, the short-term downtrend is still maintained, so after the end of the correction, one more pull of the pair downwards can be made. But overcoming the critical line will be a favorable event for the pound, which will be able to breathe freely for a few days.
Trading recommendations:
The GBP/USD currency pair began to adjust against the "dead cross". Thus, sell positions now remain actual small lots with targets of 1.2559 and 1.2504, but it is recommended to open them after the current correction is completed, if the pair remains below the Kijun-Sen line.
Purchase orders can be considered in the case of overcoming the lines of Kijun-Sen and Senkou Span A. In this case, the pound can rise to the level of 1.2706, which is obtained from the average volatility of the instrument in recent days.
In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.
Explanation of illustration:
Ichimoku Indicator:
Tenkan-sen-red line.
Kijun-sen – blue line.
Senkou span a – light brown dotted line.
Senkou span B – light purple dotted line.
Chikou span – green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com