For the previous trading day, the pound / dollar currency pair showed a high volatility of 91 points, as a result of having an amplitude fluctuation with the preservation of bearish interest. From the point of view of technical analysis, we see a restrained downward interest, where already almost close to us is a strong psychological level of 1.2000. As discussed in a previous review, traders set about short positions as soon as the quotation broke the level of 1.2150. Now, their goal is in the psychological level of 1.2000, but nobody has forgotten about the feet, as overheating is clearly observed. Considering the trading chart in general terms (day timeframe), we see that the global downward trend is developing on the values of January 2017, while the clock purity is already in the "Impulse" phase as 11 days, which makes us even more late.
The focus of the previous day, in terms of the news background, was the meeting of the Bank of England, where, in principle, we heard nothing new, for this very reason the pound remained, conditionally speaking, in one place. But what did it sound like? The head of the Bank of England, Mark Carney, said that the banking sector is ready for any scenario of a country's exit from the EU, but at the same time noted that forecasts for GDP growth rates fell for the next two years from 1.5% and 1.6% for 2019 and 2020, respectively, up to 1.3%. The head of the Bank of England stressed that the recession is directly related to the uncertainty in matters of Brexit.
Let me remind you that at the June meeting, the Head of the Bank of England himself called for a reduction in the interest rate to 0%, even though the rate was left at the current level of 0.75%, but in the published report on August 1, the market expectation of a reduction in the interest rate was reflected.
Of the most powerful events of the past day, we can highlight the statement by US President Donald Trump, who tweeted on September 1 about his intentions to increase tariffs on Chinese imports by 10% totaling $ 300 billion. The reaction from Beijing has not yet followed.
Today, in terms of the economic calendar, all attention is focused on the report of the United States Department of Labor. In general terms, there are no changes. The unemployment rate is at around 3.7%, but the average hourly wage shows an acceleration from 3.1% to 3.2%. What is more interesting is the change in the number of people employed in the non-agricultural sector, where compared to the previous reporting period, there is a decrease from 224K to 164K.
The upcoming trading week in terms of the economic calendar and events is more moderate in comparison with the past week. The main body of statistics on Britain is waiting for us on Friday, but the information background regarding Brexit can spontaneously fly out on any day of the week.
The most interesting events are displayed below --->
Monday, August 5
United Kingdom 08:30 UTC+00. - The index of business activity in the services sector (July): Prev. 50.2 ---> Forecast 51.0
United States 14:00 UTC+00 - Non-manufacturing Business PMI (PMI) from ISM (July): Prev. 55.1 ---> Forecast 55.5
Tuesday, August 6
United States 14:00 UTC+00 - Number of vacancies in the JOLTS labor market (June): Prev. 7.323M ---> Forecast 7.268M
Friday, August 9
United Kingdom 08:30 UTC+00. - Business investment (q / q) (Q2): Prev. 0.4% ---> -0.6% forecast
United Kingdom 08:30 UTC+00. - GDP (y / y) (Q2): Prev. 1.8%
United Kingdom 08:30 UTC+00 - Production volume in the manufacturing industry (y / y) (June): Prev. -1.0% ---> Forecast 1.0%
United States 12:30 UTC+00 - Producer Price Index (PPI) (y / y) (July): Prev. 1.7% ---> Forecast 1.8%
These are preliminary and subject to change.
Further development
Analyzing the current trading chart, we see a sluggish amplitude oscillation 1.2090 / 1.2150, signaling some accumulation, due to overheating of short positions, in simple terms - a market pause. Traders, in turn, continue to hold downward sentiment, and this is understandable, because in a strategic plan, the pound still has room to fall. At the same time, the risk of the onset of the "Correction" phase forces traders to tighten restrictive stops so as not to run into idle position.
It is likely to assume that the fluctuation in the given limits will still be maintained, where the pivot point remains in the form of a psychological level of 1.2000, which already indirectly plays the role of a pillar, slowing down the quote. For the alignment of the next period, we analyze fixation points relative to the existing boundaries, where a deeper downward move will be considered after fixing the price lower than 1.2000, but the sellers clearly need a regrouping, thereby not losing sight of the theory of correction.
Based on the available information, it is possible to decompose a number of variations, let's specify them:
- Positions for purchase are considered in the case of price fixing higher than 1.2180.
- If we already have positions for sale, then we shift the restrictive orders to zero relative to the borders. The primary perspective of the downward course remains in the psychological level of 1.2000.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short-term perspective have alternately changed to the ascending side due to the current stagnation. Intraday and mid-term perspectives still retain downward interest due to the general inertial movement.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(August 2 was based on the time of publication of the article)
The current time volatility is 54 points. It is likely to assume that gun powder is still present and current accumulation, in case of its breakdown, can lead to an acceleration in the market.
Key levels
Zones of resistance: 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 based on the principle of conducting a transaction, with daily adjustment
