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GBP/USD. Results of March 10. Pound sterling "repays debts" to US dollar

4-hour timeframe

analytics5e683b096f2f4.jpg

Amplitude of the last 5 days (high-low): 111p - 103p - 107p - 103p - 165p.

Average volatility over the past 5 days: 116p (high).

The British pound sterling followed the European currency and began to adjust. Moreover, the British currency grew much weaker against the dollar than the euro, and now - it has adjusted much stronger than the euro. What is it? Market participants recalled that everything is not as good as we would like in the UK? Remember Brexit and the low probability of a trade agreement with the EU? Or were British pound traders simply less likely to panic than the rest? One way or another, but the pound has already adjusted to the Kijun-sen line and so far does not show any signs that it might linger near this line. One gets the impression that the pound has undergone only a general market trend called "getting rid of the dollar", but quickly came to its senses and is now returning to the usual trading mode. If so, then the downward trend may well be resumed now, as the British currency did not have growth factors either.

Strange as it may seem, we have not received any important news, messages, and comments from "top officials" from the UK. No new reports on negotiations with the European Union, no new data on the fight against coronavirus, no new comments on possible actions of the Bank of England. Therefore, traders can only guess at the coffee grounds. The main subjects of these divinations are now the possible actions of the BoE and the Federal Reserve. The fact is that, unlike the ECB, the BoE's rates are at a more or less stable level – 0.75%. And the factor of weak monetary policy in Britain compared with the US was one of the main factors along with Brexit, the fall of the British currency in the last three years. However, if the Fed continues to mindlessly reduce the key rate, it will soon catch up with the British regulator. And then one of the main factors for the strengthening of the US dollar against the pound will be offset. Brexit will continue, negotiations on a trade deal that will continue to have a negative impact on the pound, but it is the Fed that can put an end to the hegemony of the US dollar against European currencies. And how can we not remember that Donald Trump strongly opposed the expensive dollar from the very beginning of his term as president? How can we not remember that he blamed all the troubles of the Fed and Jerome Powell personally for high interest rates? How can we not remember the emergency meeting between Powell and Trump in the White House, after which the criticism of the first noticeably subsided? In any case, the Fed has not yet taken a new step to ease monetary policy, and there are still very high chances that the BoE will go for a policy easing in March. This way, the gap can remain.

Macroeconomic statistics are currently not available from overseas or Great Britain. Wednesday will only be the only day this week that is full of important macroeconomic data, and the rest of the days will be completely empty. However, even tomorrow, we have no confidence that market participants will respond to the reports. In the last 7-10 days, the markets were completely under the impression of the collapse of stock markets, the fall in the cost of oil, and did not pay attention to the ordinary reports. Whether the period of total ignoring of statistics has ended, we will find out just tomorrow. In the meantime, we can only say that the coronavirus that caused panic in all world markets has not gone away and continues to spread throughout Europe. In Italy, a quarantine has already been declared, and all sports events have been canceled. Many other countries have also taken measures to prevent the possible spread of the virus. Of course, tourism and industrial production are the first to suffer. The latter sector is highly dependent on international activities, import/export operations. However, supply disruptions related to quarantine in some countries, such as China, and the transfer of employees to remote work in many international companies, cannot but affect business activity and production volumes. Oil has already fallen down due to the fact that the demand for it has decreased banally. And demand is reduced when production and consumption of products derived from oil, such as gasoline, are reduced.

From a technical point of view, the current movement of the pound/dollar pair is hardly even a correction. This is the British pound's collapse, since this currency has lost almost 200 points during the day. Thus, we can only once again note that now is clearly not the best time to trade, since the pair can travel long distances during the day that cannot be predicted in advance.

Recommendations for short positions:

The pound/dollar began a strong downward movement on the 4-hour timeframe. It is advised that you sell the British currency not earlier than when the pair has consolidated below the Kijun-sen critical line with the goals of Senkou Span B line and the support level of 1.2838. It is this moment that will allow us to conclude that the trend is changing to a downward one.

Recommendations for long positions:

Traders are advised to buy the pair again only if quotes return to the area above the critical line with the goal of a first resistance level of 1.3150. When opening any positions, it is recommended to act as carefully as possible and remember about the increased risks.

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 indicators window.

Support / Resistance Classic Levels:

Red and gray dashed lines with price symbols.

Pivot Level:

Yellow solid line.

Volatility Support / Resistance Levels:

Gray dotted lines without price designations.

Possible price movements:

Red and green arrows.

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