4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - downward.
CCI: -154.7020
The British pound spent the first trading day of the week in a fairly strong downward movement. However, on the approach to the lower border of the side 400-point channel, it again lost its position and began to correct. The Heiken Ashi indicator has not yet turned up, but it may do so in the near future. Thus, we do not expect to start forming a new downward trend before overcoming the area of 1.2207-1.2268. Most likely, the pound/dollar pair will again return to the moving average and again try to overcome it to continue moving to the upper border of the side channel near the Murray level of "7/8"-1.2634.
Also, as in the case of the euro/dollar pair, a large number of interesting news from the UK is not being received at the moment. However, this does not mean that there is no fundamental background, and traders have nothing to analyze. For example, despite the fact that the UK almost came out on top in Europe in the number of recorded cases of "coronavirus" (only Spain and Russia are higher), Boris Johnson is going to relax the quarantine measures from May 13, which were already far from the most stringent in the Foggy Albion, compared to other countries. However, in Spain, the epidemic is slowing down, and in Britain, it continues to rage at the same pace. In Spain and Italy, there are grounds for easing the quarantine, but in Britain there are none. But Boris Johnson understands that the longer the economy is idle, the more it falls down, already weakened by Brexit and the possible absence of trade deals with the United States and the European Union. Here, he is in solidarity with Donald Trump, whose states lead the world in terms of both the number of diseases and the number of deaths, but the American President is more interested in the work of the economy, and he considers 100,000 human losses among Americans "acceptable". At the same time, Boris Johnson said that in general, the quarantine will operate in the country, at least until June 1. "It's not time to cancel the lockdown yet," Johnson said at the weekend. Thus, from Wednesday this week, Britons will be officially allowed to go out for sports an unlimited number of times, will be allowed to travel, will be allowed to sunbathe, visit parks. However, the ban on meetings between people who do not live in the same house will continue to apply. Certain organizations that were not able to operate remotely will be able to resume operations if the rules of social distancing are strictly followed. At the next stage of lifting the quarantine, shops and schools may be opened, the British Prime Minister said. "However, if the epidemiological situation starts to deteriorate again, all the relief will be immediately canceled," Boris Johnson said. Thus, now the UK government is calling not to "stay at home", but to "be as vigilant as possible".
Also in the UK, a new threat system of infection with "coronavirus" was adopted, which includes 5 levels, from the first "green" to the fifth "red". According to this system, the country is now at the fourth level and moving to the third, thanks to the "lockdown". And of course, Boris Johnson's speech was immediately criticized. First Minister of Scotland Nicola Sturgeon, who openly dislikes Boris Johnson and is trying hard to get London's approval to hold a new referendum on independence, said that "the British population has not clearly understood what they can and can not do, and now everything has become even more vague." According to many experts, Boris Johnson will now try to return the country to normal life as quickly as possible, while trying to contain the "coronavirus" by methods of social distancing, introducing increased fines for violators. British opposition leader Keir Starmer, aka the new leader of the Labor party, commented on Boris Johnson's decision: "In fact, the Prime Minister allowed millions of Britons to return to work without providing a clear plan for ensuring safety, or clear recommendations on how to do it without using public transport."
Meanwhile, in the United States, many experts and members of the government believe that the current record levels of unemployment are not the maximum for the current crisis. White House economic adviser Kevin Hassett estimates that unemployment will be more than 20% in June. US Treasury Secretary Steven Mnuchin holds the same opinion: "The unemployment rate is likely to get worse before it starts to improve." Mr. Mnuchin also believes that further "downsizing" of the economy will cause irreparable damage. "We will open up very smart. So that people return to work safely and meet the requirements of social distance," the Finance Minister said. Mnuchin believes that the US economy will begin to recover in the third or fourth quarter of 2020, and calls the next year "remarkable". Asked if a premature and hasty exit from quarantine could lead to new outbreaks, Mnuchin said that the delay in "opening" the country after "lockdown" also carries high risks.
Well, Donald Trump is sad at the same time. According to the Washington Post, the American President is seriously concerned about falling political ratings due to the current "coronavirus" epidemic. Also, according to the publication, which refers to its own sources in the White House, Trump fears a new wave of the epidemic in the country if the quarantine is relaxed or canceled. The publication also characterizes Trump's condition as "gloomy" and states that "the US leader is shocked by the declining popularity among the American population." In addition, Trump is now focusing on the fastest and most possible recovery of the US economy, believing that only this can bring him victory in future elections. "In personal conversations, he tried to understand how his fate changed so quickly and dramatically: from the belief that he is on the way to a second term, to the realization that he is losing to the democratic candidate Joe Biden in almost all polls, including internal polls of his staff," the publication reports.
Also, Donald Trump was sharply criticized by his predecessor, Barack Obama, whom he likes to criticize very often. The former US President believes that Trump's opposition to the "coronavirus" can only be called "an absolutely chaotic disaster". It is also reported that Barack Obama himself supports the candidacy of Joe Biden in the election and agitates his supporters to support the Democrat. Naturally, representatives of Trump could not help but respond. White House spokeswoman Kayleigh McEnany said: "The reaction to COVID-2019 from Trump saved the lives of many Americans. While the Democrats were engaged in a "witch hunt", President Trump was shutting down travel from China. In that time, the Democrats promoted public meetings, and President Trump provides the country with means of protection, ventilation, and tests for coronavirus."
The average volatility of the GBP/USD pair has increased slightly in recent days and is currently 120 points. For the pound, this is not too much, there are no signs of a serious increase in volatility yet. On Tuesday, May 12, we expect movement within the channel, limited by the levels of 1.2212 and 1.2450. Turning the Heiken Ashi indicator upward will indicate a new round of upward movement.
Nearest support levels:
S1 – 1.2329
S2 – 1.2268
S3 – 1.2207
Nearest resistance levels:
R1 – 1.2390
R2 – 1.2451
R3 – 1.2512
Trading recommendations:
The GBP/USD pair tried to resume its downward movement on the 4-hour timeframe. Thus, formally, short positions with the goals of 1.2268 and 1.2207 are currently relevant, but the downward momentum could have dried up yesterday. On the approach to the lower border of the side channel, we believe it is not advisable to sell the pair. It is recommended to buy the pound/dollar pair not before fixing the price above the moving average with the first goals of 1.2451 and 1.2512.
The material has been provided by InstaForex Company - www.instaforex.com