4-hour timeframe
Technical data:
The upper channel of linear regression: direction – sideways.
The lower channel of linear regression: direction – sideways.
The moving average (20; smoothed) – down.
CCI: 6.5866
Over the last trading day, the technical picture of the GBP/USD currency pair has not changed at all. The pair continues to trade between the level of 1.2207 and the moving average line (or the level of 1.2329), forming a kind of sideways channel. Thus, the bears calmed down a bit, which is good for the pound, but the bulls have not yet activated. Boris Johnson's "ingenious" plan, offering the EU an alternative to the "backstop" mechanism, was quickly criticized by some EU leaders. First, the plan received a portion of criticism from Ireland, and yesterday from Jean-Claude Juncker, the President of the European Commission. Juncker said that there are shortcomings in Boris Johnson's plan that need to be worked on, but noted the desire of the British Prime Minister to negotiate and move them forward. There was also another telephone conversation between Juncker and Johnson, during which the parties again discussed Brexit, but under a new "sauce". Well, the border on the island of Ireland remains a stumbling block, because of which the parties cannot come to an agreement for several years. The problem is that the UK does not want Northern Ireland to somehow depend on the European Union after Brexit, to maintain ties with the Alliance. Ireland is afraid of civil wars that could break out on the border with Northern Ireland, and which have just been stopped, thanks to the 1998 Belfast Treaty. Therefore, one side needs a rigid border, and the second is not needed.
We are skeptical of Juncker's statement. Traders have already heard about "progress in negotiations", "positive shift" and "hope of signing a deal". Each time, such information was not confirmed in practice. Plus, there is another important factor. More precisely, the most important factor is the UK Parliament. It was the deputies who blocked three times the "deal" of Theresa May, to which the European Union agreed. Where is the guarantee that the same thing will not happen now? Parliamentarians may again not like something in the text of the agreement, and then Boris Johnson may agree on anything with Brussels, but the agreement will not be ratified in the UK itself. In addition, many experts and political scientists have repeatedly noted that even if the parties manage to find a compromise, there is catastrophically little time to complete everything legally, pass the document through the British Parliament and sign an agreement at the UK – EU level. After all, Boris Johnson must have time to do all this before October 19. If a deal with Brussels is not signed on October 19, the Prime Minister is obliged to ask the European Union to postpone the Brexit date.
And the British currency is paired with the US dollar, a feeling that is waiting for the development of events. He is waiting for the end of the new negotiations between London and Brussels. In this case, traders need to track technical factors to determine a trading strategy. For example, previously overcoming the moving average – buying the pound is not recommended. Returning to the pair's sales – not earlier than overcoming Murray's level "0/8" - 1.2207.
Nearest support levels:
S1 – 1.2268
S2 – 1.2207
S3 – 1.2146
Nearest resistance levels:
R1 – 1.2329
R2 – 1.2390
R3 – 1.2451
Trading recommendations:
The GBP/USD pair continues its upward correction on October 3. Thus, today, traders are encouraged to expect its completion and in the event of a rebound from the moving or reversal of the Heiken Ashi indicator down, resume selling the pound/dollar pair with the first target of 1.2207. It is recommended to buy a pair no earlier than overcoming a moving with a target of 1.2390.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue lines of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the indicator regression window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
