Over the past trading day, the pound / dollar currency pair showed a low volatility of 68 points, as a result of having a sluggish fluctuation, but in the direction we need. From the point of view of technical analysis, we see that the theory of displacement of accumulation boundaries within the range of 1.2000 / 1.2150 is in the active phase, presumably working out the upper limit. Of course, it is too early to say that this shift is caused by the oversaturation of short positions, and the quote is trying to get closer to the psychological control level of 1.2000, but there are reasons for this.
As discussed in the previous review, traders continue to follow two tactics at once: work on accumulation ranges (aggressive method) and work on the breakdown of control values (conservative method). Each method has its own “highlight”, and volatility, which is generally high, helps to implement these approaches in the work. Considering the trading chart in general terms (daily timeframe), we see that the 1.2150 level works on the principle of resistance, winding up the idea of how much the GBPUSD pair was not oversold. There are still more short positions, otherwise the “Correction” cycle did not keep us waiting so long. The global downward trend remains low, as well as the control point in the form of a psychological level of 1.2000 (+/- 30 p).
The news background of the past day was boring, as the economic calendar was, frankly, empty in terms of parsing Britain and the United States.
The information background was, on the contrary, more lively; Prime Minister Boris Johnson made his first public attempt to interact with Brussels regarding the revision of the agreement on the country’s exit from the EU. Johnson sent a letter to the President of the European Council, Donald Tusk, which refers to the revision of the “back-stop” item. According to the head of government, it is this item that stops the agreement in parliament, since the formation of tight borders between the two countries contradict the terms of the Belfast Agreement. Meanwhile, Boris Johnson insists that both sides should look for other ways to keep the border free from inspections and must commit themselves to create such mechanisms as much as possible, before the end of the transition period, that is, possibly, by the end of 2020. In turn, US President Donald Trump during a telephone conversation with Boris Johnson discussed the Brexit process and trade issues. The specifics of the conversation are missing, the only thing Mr. Trump said was that the discussion was excellent, and he was looking forward to meeting Johnson at the G7 summit in France.
Today, in terms of the economic calendar, the day is even more boring than yesterday, since there are no statistics for more than one country. Support to the market can be provided only by the information background and the upcoming minutes of the meeting of the US Federal Reserve Open Market Committee.
Analyzing the current trading chart, we see that the pressure from the side of short positions remains on the market and the quote has already returned to the area of 1.2080, where a periodic, mirror level of low importance was found earlier. Regarding the current fluctuation and development of the 1.2150 level, the theory of cluster boundary shift (1.2000 / 1.2150) is seen as a rather realistic scenario. Traders, in turn, steadily continue to follow the previously announced methods, where some ride on the current decline, considering the fixation of previously received profit in the values of 1.2080-1.2020. Others restrainedly wait for price fixing relative to the control points 1,2000 / 1,2200.
It is likely to assume that special attention is now focused on the coordinates of 1.2080, since it can be, though temporary, but support in the market. But in the event of its breakdown, the movement towards the psychological level of 1.2000 (+/- 30 p.) looks like a real picture of development.
Based on the above information, we derive trading recommendations:
– It is better to consider buying positions in terms of working out the mirror level of 1.2080, since the level is still of low importance. However, if you go down to the limits of 1.2020-1.2000, it can play in terms of stopping and working out the psychological significance. Wait for at least some stop before entering the market.
– Sell positions, if you already have, in terms of an aggressive approach to the value of 1.2080, partial exit with the stop loss moving to zero. The further movement is considered after fixing the price lower than 1.2075, with the prospect of a movement to 1.2020-1.2000. Conservative traders are out of the market, waiting for clear price fixation lower than 1.2000.
Analyzing a different sector of timeframes (TF), we see that indicators on all the main timeframes signal a further decline, which, in principle, reflects the current market background. If the temporary support is within 1.2080, indicators in the short term can temporarily jump, it is worth considering this point in the analysis.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(August 20 was built taking into account the time of publication of the article)
The volatility of the current time is 55 points, which is pretty good for this time section. It is likely to assume that in the case of maintaining a downward mood and overcoming the level of 1.2080, we can see a temporary acceleration expressed in increasing volatility.
Resistance zones: 1.2150 **; 1.2350 **; 1.2430; 1.2500; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1.3300
Support Areas: 1,2000; 1.1700; 1.1475 **
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment
The material has been provided by InstaForex Company – www.instaforex.com