Over the past trading day, the currency pair pound / dollar showed a volatility equal to the average daily 94 points, as a result of maintaining the inertial move. From the point of view of technical analysis, we see that the bearish interest is firmly entrenched in the market, and together with the week, we have a downward course of more than 250 points, without any correction. Going into more detail, we see that the quotation overcame a number of periodic levels on its way, but what is more interesting is that we slipped to the local minimum of February, which also reflects the strong level of 1.2770, which is located on the same coordinate. Summarizing the primary results of the end of the week, we made a decent profit, working on the decline from the breakdown of the psychological level of 1.3000. On the other hand, the news background had strong statistics about the United States. The number of building permits issued in April is increasing from 1.288M to 1.296M with a forecast of 1.290M, while at the same time, the volume of construction of new houses shows a significant increase from 1.168M to 1.235M with a forecast of 1.205M. The labor market has a similarly good news. The number of initial claims for unemployment benefits is reduced from 228K to 212K with a forecast of 220K. Returning to the information background, we have a speech by the head of the 1922 Committee of the Conservative Party, Graham Brady, who said that Prime Minister Theresa May could leave her post after the second reading of the Brexit document in Parliament.
“We agreed that we would meet after the second reading of the document (on Brexit in Parliament – approx. Ed.) and agree on a timetable for the election of a new party leader,” said Brady.
Coupled with the entire background, the dollar received significant support against the pound, and we saw the same decline.
Today, in terms of the economic calendar, we do not have any solid data on the States and Britain. Thus, a technical correction can play, if, of course, the information background does not fly out.
The upcoming trading week in terms of the economic calendar is quite saturated in comparison with the past. Displayed below are the most relevant events.
United States 17:00 MSK – Sales in the secondary housing market (Apr): Prev. 5.21M —> Forecast 5.36M
United Kingdom 11:30 Moscow time. – Consumer Price Index (CPI) (y / y) (Apr): Prev. 1.9% —> Forecast 2.0%
21:00 MSK – Publication of FOMC protocols
United Kingdom 11:30 Moscow time. – Retail Sales (YoY) (Apr): 6.7%
United States 17:00 MSK – Sales of new housing (Apr): Prev. 692K —> 670K forecast
United States 15:30 MSK – Basic orders for durable goods (m / m) (Apr): Prev. 0.4%
These are preliminary and subject to change.
Analyzing the current trading schedule, we see how a steady inertial move led us to the level of 1.2770, which reflects our assumed foothold. It is likely to assume a primary slowdown within the level of 1.2770-1.2760, where in case of working off, we will have a long-awaited correction which many traders are focused on.
Based on the available data, it is possible to decompose a number of variations. Let’s consider them:
– Positions for buy are considered in the case of mining the level of 1.2770 and price fixing higher than 1.2800. The prospect of a corrective move: 1.2865 — 1.2925.
– Positions for sale were held for quite a long time, and we managed to collect a lot. Now, if we consider these transactions, it is only in the case if there will be support for the information background, together with the fixation of prices lower than 1.2750.
Analyzing a different sector of timeframes (TF), we see that indicators in all time frames tend to decrease due to the massive inertial move. In the case of deceleration, the first to change indicators are the indicators for smaller TFs.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(May 17 was based on the time of publication of the article)
The current time volatility is 22 points. The probability of accelerating volatility is quite high, in any outcome – whether this correction is due to overheating or breakdown of the level.
Zones of resistance: 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700
Support areas: 1.2770 **; 1.2620; 1,2500 *; 1.2350 **.
* Periodic level
** Range Level
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