At the end of the last trading week , the currency pair Pound / Dollar showed a high volatility of 112 points. As a result, it had a full-fledged working out of the predicted level and a corrective movement. From the point of view of technical analysis, we have the execution of the previously set forecast, wherein the price still managed to find a pivot point in the surface of the level 1.2770. After the correction phase came, it rolled back to a periodic value of 1.2920. What was the reason for this kind of amplitude? Of course, we can say that there was a technical correction, which we had been waiting for a long time, and this might be true, but you should not forget about the news and news background, which made a significant contribution to this correction. Meanwhile, we have a fairly wide news flow on Friday, wherein the British retail sales statistics first come out, which surprised the market with its growth: Prev. 3, 1% ---> Forecast 3.4% ---> Fct. 4.2%. This news has already set the inertial course for buyers. After that, there is a statistics on industrial production in the United States, where there is a decline from 4.1% to 3.8. Along with that, data on retail sales in the United States was released on Thursday (from 4.1% to 2.3%). Thus, we have a pretty strong negative background on the dollar. Now, we understand why this kind of movement has taken place.
Today, in terms of the economic calendar , we have a lull, there is no news, and the States are celebrating the "Presidential Day" holiday. Therefore, trading volumes can be reduced. Of course, in the absence of news, you should not forget about the information background, which is always enough around Brexit. For example, on weekends, Prime Minister Theresa May sent a letter to the members of the Conservative Party, in which she urged them to rally in front of Brexit. "Without an agreement on withdrawal, we run the risk that there will be a force in parliament that will stop Brexit completely," the letter says from May. Now, Theresa May intends to return to Brussels for the next discussion with Jean-Claude Juncker, where she will persuade him to make at least some changes to the agreement once again.
Analyzing the current trading chart, we see how the quotation with positive accuracy reached a periodic level of 1.2920, which previously played the role of a pillar in the market. It is likely to assume that the quotation will try to slow down in an attempt to work out this level in a downward direction. In return, traders try to consider both variations at once. The first one is to rebound from the level, while the second will be a possible breakdown in case of fixation above.
Based on the available data, it is possible to break down a number of variations. Let's consider them:
- Positions to buy, as we said in the previous review, traders considered buying positions from a slowdown of 1.2770, and when all predicted coordinates were reached. Now, traders monitor the level of 1.2770 for breakdown. And in the case of a clear price fixing above, with the preservation of bullish interest, long positions can resume.
- We consider selling positions in the case of mining level 1.2920, lower than 1.2890. Perspective 1.2850--1.2800 --- 1.2770.
Analyzing the different sector of timeframes (TF ), we see that there was a downward interest against the background of the primary level of 1.2920 in the short term. On the other hand, intraday perspective focuses on the recent corrective movement while the medium term perspective maintains a downward interest against the background of the market.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, with the calculation for the Month / Quarter / Year.
(February 18 was based on the time of publication of the article)
The current time volatility is 31 points. If stagnation occurs at the level of 1.2920, then the volatility will be fixated on a small amplitude. But in the case of a test or breakdown, we can see an increase in in volatility to the daily average.
Zones of resistance: 1.2920 *; 1.3000 ** (1.3000 / 1.3050); 1,3200 *; 1.3300; 1.3440 **; 1.3580 *; 1.3700.
Support areas: 1.2770 (1.2720 / 1.2770) **; 1.2620; 1.2500 *; 1.2350 **.
* Periodic level
** Range Level