4-hour timeframe
Technical data:
The upper channel of linear regression: direction – up.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – down.
CCI: -85.5371
Brexit is completely at a standstill, while the British pound continues to fall down. No new messages on this topic have been received at the disposal of traders; everyone is waiting for the EU summit, at which the key event for the UK and the pound will happen. Boris Johnson will either agree with the EU on a "deal" (probability – 5%, from our point of view), or ask for Brexit to be postponed for three months (probability – 90%), or refuse the first two options and go on the exit without a "deal" (probability – 5%), contrary to the Parliament and the legislation of the Kingdom. What will Johnson expect if he implements a "hard" Brexit? – the second question. The first remains: what awaits Britain after October 19? But since there is no new information on this topic right now, traders can only wait for the news or on October 19th.
Today, there will be several macroeconomic publications in the UK. August GDP data will be known, as well as changes in industrial production in the same month. Experts' forecasts are not comforting. In annual terms, the decline in industrial production should be 0.9%, in monthly terms – 0.1%. GDP growth is expected at 0%. Needless to say, if the forecast values are confirmed, then the pound will not have to rely on support from traders again? Also, another performance of the Bank of England Governor Mark Carney is planned for today, however, if Powell has not recently spoiled the markets with important information, then Carney does not give any information to traders at all. Maybe something will change today? Still, the issue of easing monetary policy is facing the Bank of England too. Although, most likely, the British regulator will not be in a hurry in this matter and will wait for the end of the month to know for sure how the summit will end on October 17-18.
Well, the pound paired with the US dollar continues to move downward, because it has nothing else to do. What are the grounds for strengthening the British currency now? Recently, there have been no economic reports in either America or Britain. Brexit is on pause. Boris Johnson's policy does not lead to any positive results for the country. In such a situation, traders can only get rid of the pound systematically. Thus, we do not expect anything else from the pound/dollar pair.
Nearest support levels:
S1 – 1.2207
S2 – 1.2177
S3 – 1.2146
Nearest resistance levels:
R1 – 1.2238
R2 – 1.2268
R3 – 1.2299
Trading recommendations:
The GBP/USD currency pair continues to move down. Thus, today, it is recommended to continue selling the pound/dollar pair with targets of 1.2177 and 1.2146. The bulls lost the initiative out of their hands again and remain extremely weak, so purchases are not relevant and appropriate now.
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 regression window of the indicator.
The moving average (20; smoothed) – the blue line on the price chart.
Murray levels – multi-colored horizontal stripes.
Heiken Ashi – an indicator that colors bars in blue or purple.
