For the last trading day, the currency pair pound / dollar showed volatility which is almost equal to the average daily 95 points, as a result of maintaining the downward interest in the market. From the point of view of technical analysis, we have a complete coincidence of the previously laid out forecast. The quote has kept its bearish interest in the market, and reaches the support level of 1.2620. What do we have in general? The strongest decline since May 6, having to this day more than 540 points of progress. I will note, without any significant correction. Oversold goes off scale, and many traders will agree with this, but the negative information background in Britain is so wide that the market does not even have time to go into a banal technical correction. No matter how bad things are around Britain and the growing oversold, speculators feast on, since all this confusion makes it possible to ride on strong movements.
Now, let’s move on to the information and news background which has been holding us for a long time. Yesterday, there was data on inflation in the United Kingdom, where they expected acceleration from 1.9% to 2.2%. As a result, there was still an increase, but by 2.1%. The news is, of course, positive for Britain, but the topic of Brexit still covers the entire existing news stream. Thus, the information background continues to delight the speculators. This time there was a news that the leader of the House of Commons of the United Kingdom, Andrea Leadsom, resigned because of the disagreement with the position of Prime Minister Theresa May on Brexit. In her statement, she wrote about a big discrepancy in visions with Theresa May, specifically on the procedure of leaving the UK from the EU. In turn, the media actively procrastinating appeared rumor about the resignation of Theresa May this week. From hearing the rumor, we have is that the Prime Minister may declare resignation from his post after her scheduled meeting on Friday with Graham Brady, the head of the 1922 Committee, which brings together rank and file MPs-Tory and determines the questions of selecting or changing the party leader.
Today, in terms of the economic calendar, we have statistics on new home sales in the United States, where they expect a decline from 692K to 675K, and there will also be initial applications for unemployment benefits, which has a growth prediction from 212K to 215K. The US news is not entirely good, and they could put pressure on the US currency, but do not forget about the general information background, which puts a lot of pressure on the pound.
Analyzing the current trading chart, we see that the quotation maintains a downward interest in the market, trying to get below it. From the logical point of view, quotations need to be corrected due to substantial oversold, but this is from the point of view of logic, and not reality. For this reason, the primary thing that can be considered is the possible slowdown within 1.2590 / 1.2640, then we can analyze the behavior of the quote. If the inertial move continues, I do not exclude a further decrease to 1.2500.
Based on the available data, it is possible to decompose a number of variations. Let’s consider them:
– We consider buying positions in case of loss of bearish interest at the current stage and price fixing higher than 1.2640, with the prerequisite of working off the level, analyze on a shorter time frame.
– Positions for sale, if they will be added, so in the case of fixation lower than 1.2590, with a prospect of 1.2500, which is the first point.
Analyzing a different sector of timeframes (TF), we see that the indicators in the short, intraday and medium term, persist a downward interest on the general background of the market.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(May 23 was based on the time of publication of the article)
The current time volatility is 61 points. It is likely to assume that in the case of preservation of the information background, the volatility will remain at a high level.
Zones of resistance: 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 *; 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700
Support areas: 1.2620; 1,2500 *; 1.2350 **.
* Periodic level
** Range Level
The material has been provided by InstaForex Company – www.instaforex.com