24-hour timeframe
After the British pound collapsed by more than 1500 points, it is time for a respite. No, not for a correction, but for a respite. The quotes of the GBP/USD pair rose by 450 points for a moment on Friday, March 20, which is not so small even compared to the previous fall, but eventually, it fell to almost the lows of the week, month, year and decade near the end of trading. Thus, we believe that there is not enough reason to conclude that an upward correction has started, at least on the 24-hour timeframe. The correction looks weak and already completed even on the 4-hour timeframe. Unfortunately, there is nothing to talk about now except the coronavirus epidemic and the countries' fight against it. We would like to note the actions of the Bank of England and the Federal Reserve, the US and UK governments in combating the negative consequences of the epidemic, but, first of all, there is no official information or figures that could confirm that the measures taken have improved the situation. Secondly, the mood of traders is not affected by either macroeconomic reports or the fundamental background. There is panic everyday in the forex currency market, in principle, you can write the same thing, since the situation does not change at all.
Before introducing a general quarantine in the UK, Prime Minister Boris Johnson, as usual, distinguished himself. Recall that initially the prime minister did not want to introduce strict quarantine measures, did not want to close schools, did not want to close pubs, suggesting that it is better that the majority of Great Britain's population got sick with the virus and they developed immunity. However, having come under a barrage of criticism for his actions, as well as for forecasts (according to Johnson, many families will lose their loved ones, and 80% of the British population may get sick), Johnson still ordered to close all establishments except grocery stores and pharmacies. "We ask you to stay at home to protect our health care system and save lives," the prime minister asked. Johnson also said: "I am convinced that we will defeat the coronavirus. I think we can turn the tide over the next 12 weeks, but it depends on collective, decisive action." A statement in the style of Donald Trump. "We will win everyone," "we will win this war," and so on. Well, then everything, as everywhere else in the world now. British citizens are asked not to leave their homes unnecessarily, and not to receive guests.
As for the economy, the Johnson government is developing a plan to compensate all quarantined workers for their wages for the duration of the quarantine. These measures will be taken as part of the fight against the total number of cuts. However, having not yet managed to really calm the British people, who are no longer worried about the coronavirus, but because of the closure of pubs and the lack of football, Johnson immediately made another statement, in which he calmed the people in his own style. The British prime minister believes that the country can repeat the Italian scenario of the spread of the epidemic, if the population does not limit social activity. "The number of deaths in Italy is in the thousands and is constantly growing. If we do not act together and make heroic and collective efforts at the national level to slow down the epidemic, there is a high probability that our national health system will also be overloaded," Johnson said. However, according to experts, it is not even a matter of how closely citizens adhere to the government's decrees. The UK lags behind Italy by about two weeks in the dynamics of the epidemic. At the same time(!!!) there is no strict quarantine in Britain. Public places and places are closed, but there is no direct ban on movement. Thus, Britain has every chance to repeat the fate of Italy, where there are already more than 50,000 thousand cases and almost 5,000 deaths...
The bright spot on the global map of the spread of the virus is now China. The main focus of the epidemic has managed to contain the infection and now, according to the International Monetary Fund, its economy is beginning to recover. Most large businesses have opened, and employees who were quarantined and sent to work remotely have returned to their offices. However, the IMF believes that it is still very early to celebrate the victory, since the COVID-2019 virus may return to China with the resumption of international air traffic and the opening of borders. Also, experts believe that for a long time, many consumers of Chinese goods may avoid these products, fearing to get infected with the coronavirus.
Recommendations for short positions:
The pound/dollar continues to be in a downward trend on the 24-hour timeframe. Thus, short positions remain relevant, although the goals are no longer there, they were all overcome.
Recommendations for long positions:
It will be possible to buy the British pound no earlier than when the price is consolidated above the critical line. However, the price is too far from the Kijun-sen line, so this scenario is not expected in the near future.
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.
The material has been provided by InstaForex Company - www.instaforex.com