4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -122.0091
The British pound continues to fall against the US currency. We have already said in the final article for the past week that the fall of the currency by 10 cents in 5 days can not be characterized in any other way than a collapse. The most interesting thing is that even on Friday, at the close of the trading week, there were no signs of the beginning of a correction. Thus, we draw the same conclusions as for the EUR/USD pair: the market is in a state of panic, so movements can be in any direction and with any force. When opening any positions, this point should be taken into account.
As we have already said, macroeconomic statistics now have almost no effect on traders. However, there will be several reports to pay attention to during the new trading week. In fact, any macroeconomic information is now important only as part of tracking the overall trend. In other words, how much will any single economy slow down? But each individual report does not matter much. We have already discussed the Fed meeting in the article on the euro/dollar. We believe that this is the only event this week that can really change the trading priorities of market participants. And then only if Jerome Powell goes for another interest rate cut. Only this decision of the Fed can stop the strengthening of the dollar fundamentally. However, we do not want traders to get the impression that only the Fed meeting can stop the strengthening of the US currency. We still believe that the downward movement can end at absolutely any moment. Moreover, at any moment, the pair can begin to grow no less strongly. For no apparent reason. Once again, we draw the attention of market participants: the rise or fall of the dollar, pound or euro does not depend on what is happening in the US stock market, and does not depend on the confidence or lack of confidence in a particular currency, as a "safe haven currency".
Returning to the statistics from the UK, we should note the reports on wages for January, the unemployment rate for January, as well as applications for unemployment benefits for February (all these data will be published on Tuesday). No more interesting statistics will be received from the UK until the end of the week. As for the most significant report on wages in the Foggy Albion, experts expect even a slight acceleration of this indicator compared to January. Taking into account bonuses, salaries can grow by 3%, and without taking into account - by 3.3%. Unfortunately, it is unlikely that these optimistic data (if they turn out to be such) will support the British pound.
Against the background of the latest news about the COVID-2019 virus, the topics of Brexit and the UK-EU trade negotiations have completely disappeared from the front pages of newspapers. If there is absolutely nothing to say about trade negotiations now, since there is simply no new information, then Brexit may once again affect London before the final "break", scheduled for December 31. According to experts in the fields of medicine and law, the UK will have to wait longer for the "coronavirus" vaccine and pay more for it, since it has already formally left the EU. Thus, if the necessary vaccine is developed in the European Union, London may face problems in obtaining it as quickly and as simply as possible. However, while there is no vaccine against the virus, the British government is trying to contain the growing scale of the pandemic by isolating all residents of the country over 70 years old. This was stated by Health Minister Matt Hancock. As the government plans, elderly people will be forbidden to go outside, all necessary food and medicine will be delivered directly to the door, and they will also be prohibited from receiving guests. Also, Prime Minister Boris Johnson intends to call on British companies to produce more artificial ventilation devices to help doctors cope with the epidemic. If necessary, the government will be ready to rent any necessary number of beds in private clinics.
From a technical point of view, the most important at this time, the downward movement continues. All indicators are directed downward, so now the trend for the pound/dollar pair is absolutely downward.
The average volatility of the pound/dollar pair over the past 5 days is 256 points and continues to grow. The last two trading days were absolutely record-breaking for the pound - 350 points were passed for each day. With that in one direction. On Monday, March 16, we expect the pair to move within the volatility channel of 1.2017-1.2529. This pair is likely to move back to the lower border.
Nearest support levels:
S1 - 1.2207
S2 - 1.2085
S3 - 1.1963
Nearest resistance levels:
R1 - 1.2329
R2 - 1.2451
R3 - 1.2573
Trading recommendations:
The GBP/USD pair continues its strong downward movement. Thus, the current sales of the pound remain relevant with the targets of 1.2207 and 1.2085, before the reversal of the Heiken Ashi indicator to the top. It is recommended to return to purchases of the British currency with the target of 1.2939, not before fixing the price above the moving average line, which is not expected in the near future for obvious reasons (the price is too far from the moving average). We remind you that in the current conditions, opening any positions is associated with increased risks.
Explanation of the illustrations:
The highest linear regression channel is the blue unidirectional lines.
The lowest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi is 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