While the negotiations between England and Brussels on a trade agreement are in full swing, traders have become more active and under the auspices of Bloomberg began to actively fantasize, and what would happen if..?
Everyone understands that a negative outcome on Brexit will lead to an instant weakening of the British currency. So after four years of divorce litigation, even the most ardent speculators are tired, and now, the result without a deal will affect the trading chart by weakening the pound by about 5% of the total value according to the survey.
A positive outcome of the existing negotiations, which will be expressed by the conclusion of a peace deal, according to a bloomberg survey, may lead to the strengthening of the British currency by another 2% of the current value. It is worth noting that relative to the March lows, the pound against the dollar has already strengthened by more than 16%, so such a modest scale of 2% may be considered justified.
Don't forget that even a positive Brexit is a blow to the UK economy, which is declining in volume throughout the long-running process, if you don't take into account the catastrophic global crisis of 2020
If you go back to the current Brexit negotiations, you can see that the media is actively full of rumors that the parties are allegedly closer to a positive outcome and close officials plan to announce a breakthrough on Monday.
Toxic info-noise with unjustified expectations leads to local strengthening of the pound.
At the same time, these same "Insider" sources claim that the talks may still fail, as the two sides are still some distance apart on familiar stumbling blocks that have plagued the talks since they began in March. Getting a deal will still require the UK to make serious political decisions about whether it is willing to compromise, especially on the thorny issue of access to British fishing waters, an EU official said.
To be brief, Britain and the EU are using the pressure of time to try to force each other to compromise.
It is worth recalling that even in the case of a positive outcome, the parties need to ratify the agreement and this process also requires time.
According to information on the ratification of the agreement to the British Parliament a couple of days, while the European Parliament this should take about three weeks.
In terms of technical analysis, you can see that during the past day there was an attempt to reverse the quote, where market participants locally managed to go down to the area of 1.3165, but then there was a stop with a reverse move in the direction of the rebound point of 1.3240. Approximately zero change, where the daily candle is close to the "Doji" shape.
Unfortunately, the information background does not allow us to fully develop the downward interest, thus the multi-stage system described in previous reviews may be postponed indefinitely.
As for the market dynamics for November 16, there is the lowest indicator since the beginning of November, it was 76 points, which is 38% below the average level. It is worth considering that even with such a high discrepancy between the average and daily dynamics, minute intervals reflect acceleration, where the naked eye can see the speculative hype.
Looking at the trading chart in General terms (daily period), you can see that the recovery relative to the September downward tact is more than 80%, and this indicates a high desire on the part of buyers in this period.
Today, in terms of the economic calendar, we do not have statistics for the UK but the United States has something to report for.
Retail sales in the United States seemed to grow but also decreased, this was due to the fact that the previous indicators were revised in favor of growth from 5.4% to 5.9%, and the current value came out at 5.7%.
After that, we published data on the volume of industrial production, which came out better than the forecast. The previous indicator was revised for the better -7.3 - - - > - 6.7%, and the current indicator reflected an even greater slowdown in the rate of decline to - 5.3%.
Analyzing the current trading chart, you can see that the maximum of the last day had passed, and the speculative mood associated with some rumors about the positive outcome of Brexit began to chase a quote to the side of the 1,3300 level.
Now everything depends on further information of the noise as fixing prices higher than USD 1.3300 for a four-hour period can increase the chances of buyers for further recovery relative to September, where the impact will be local maximum 1,3480.
It is worth considering that the pound is already overbought and a small change in background information, for example, it could lead to a reduction in long positions and as a result of a natural rebound from a low of 1.3300.
Thereby keeping prices lower than USD 1.3300 leaves the sellers in a descending course.
Indicator Analysis
Upon analyzing a different sector of timeframes (TF), it is clear that the indicators of technical instruments continue to follow the upward course signaling a purchase.
Volatility for the week / Volatility Measurement: Month; Quarter; Year
Measurement reflects the average daily fluctuation based on the calculation for the Month / Quarter / Year.
(November 17 was based on the time of publication of the article)
The Dynamics of the current time is only 86 points, which is 30% below the average level, but you can see speculative interest which you can earn by operating on smaller time periods.
Key level
Resistance zones: 1,3300**; 1,3600; 1,3850; 1,4000***; 1,4350**.
The support area: 1,3175(1,3200); 1,3000***; 1,2840/1,2860/1,2885; 1,2770**; 1,2620; 1,2500; 1,2350**; 1,2250; 1,2150**; 1,2000*** (1,1957);1,1850; 1,1660; 1,1450 (1,1411).
* Periodic level
** Band level
***Psychological level
I advise you to read the articles:
EURUSD-Great America is like a circus
GBPUSD is the never-ending word BREXIT
Trading recommendations on the currency market for novice traders-EURUSD and GBPUSD 17.11.20
The material has been provided by InstaForex Company - www.instaforex.com