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Overview of GBP/USD on November 6th. Forecast according to the "Regression Channels". The British Parliament is dissolved.

4-hour timeframe

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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: -83.6173

The British pound paired with the US dollar also reversed the downward trend, settling below the moving average line. However, the movement that the pound is now showing is difficult to characterize in any specific way. Volatility, if not minimal, is close to it. There is no trend as such. Both channels of linear regression are directed upwards, but the pair is located below the moving average line. From a fundamental point of view, circumstances are no better. Brexit is paused, the British Parliament will be officially dissolved today, all political parties will begin to prepare for, possibly, the main elections in the history of the country, respectively, their thoughts will not be occupied with the "divorce" process with the EU, but with the victory in the elections. Perhaps this is why the British currency has shown such weak and unconvincing movements in recent weeks. As for macroeconomic statistics, the UK has long been on vacation. Over the past two weeks, this country has received data only on business activity in various areas and we cannot say that they pleased traders. It seems that market participants did not even pay much attention to these figures. And in America, there are no major publications scheduled for today. Will the calm continue?

Meanwhile, in the UK they said they would not ask Brussels to extend the so-called "transition period" after Brexit did take place. Recall that under the previous agreement, the "transition period" should last until December 31, 2020, and before the expiration of this time, the parties should enter into a trade agreement and discuss all other aspects of cooperation in the new format. By agreement of October 17, the UK has the right to request a one-time extension of the "transition period" from the European Union for two years. The source of such a statement was not reported, however, according to experts, it is close to Boris Johnson. Also, many British experts expect long and painful negotiations on a free trade agreement between the EU and the Kingdom. According to some, new negotiations may last several years. It is likely that after Brexit (if it takes place at all), we will witness new epics under the names "Transition period" and "Negotiations on a trade agreement."

Well, Boris Johnson's main opponent, Jeremy Corbyn, responded to his criticism of him and his party. Johnson previously accused Corbyn that the leader of the Labor Party does not have a clear plan for Brexit, likes to criticize other people's plans, which took a lot of time, he does not offer anything useful for the country. As part of the campaign ahead of the snap election on December 12, Corbyn spoke out and presented his party as an advocate for workers across the country and a guarantor of Britain's welfare. "Prime Minister Boris Johnson is using Brexit to fuel Thatcherism on steroids," the opposition leader said, referring to Margaret Thatcher, who once privatized many businesses. Margaret Thatcher was never popular among the working class. This is exactly what Jeremy Corbyn wants to play on to get as many votes as possible in the upcoming election.

Well, the next five weeks will be about politics in the UK. We continue to believe that in these very five weeks, there is a high probability that the pound will resume its decline. First, there are no grounds for growth now, neither fundamental nor technical. Secondly, we did not see a normal correction after the rise of the pound/dollar currency pair by 800 points. Thus, at a minimum, we expect a decline in the area below the level of 1.2800.

Nearest support levels:

S1 – 1.2878

S2 – 1.2848

S3 – 1.2817

Nearest resistance levels:

R1 – 1.2909

R2 – 1.2939

R3 – 1.2970

Trading recommendations:

The GBP/USD pair has consolidated below the moving average line, but what is happening in the market now falls more under the definition of "flat". Formally, traders can consider selling the pound with targets of 1.2848, 1.2817 and 1.2787. We would not recommend doing this in large volumes, as both trend channels of linear regression remain directed upwards. However, the most preferable is 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) – the 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