The GBP/USD pair, moving along the correction course from the support level of 1.2770, reached the psychological value of 1.3000, where the accumulation process occurred at an amplitude of 80-100 points. The high degree of ambiguity caused by the information and news flow of Brexit puts pressure on market participants, but the same process brings together speculative hype, which will lead to high activity and a breakdown of the current slowdown framework sooner or later.
The coordinates of increased attention are the values of 1.3035//1.2860//1.2885. A breakdown of one or another frame of variable amplitude will most likely lead to an increase in volume and, as a result, to an impulse price change in the market.
Analyzing last Friday's trading day by the fifteen-minute, it can be seen that the area of the psychological level of 1.3000 is being approached again, where the price rebound in the opposite direction naturally occurred. A reversal of direction within the amplitude began at 9:45 UTC+00, while the downward trend continued until the end of the trading day to a low of 1.2912.
In terms of daily dynamics, the first slowdown in volatility in 14 trading days is recorded, the indicator dropped below 100 points and amounted to 86 points, which is 31% below the average level. It is worth noting that the high dynamics took place for 13 consecutive trading days, and the average daily volatility indicator was 141 points, calculated from September 1 to September 17. Based on such impressive volatility indicators, we can safely say that there is a high degree of speculation in the market, and the current slowdown accumulates trading forces, which can lead to even greater market changes.
As discussed in the previous review, traders have local operations relative to the regularity of the 1.3000 level, but the main trading volumes will take place after the price exits the slowdown.
Considering the trading chart in general terms (daily period), it is worth highlighting the inertial move from September 1, since it is considered a possible signal of a change in the market mood, from an upward trend to a downward trend. In order to develop this assumption further, the quote must fix below 1.2770.
Friday's news background included data on retail sales in Britain, the growth rates of which accelerated from 1.4% to 2.8%. The reaction of the pound to the statistics was against the general background of the price return to the level of 1.3000.
In terms of the information background, we have difficult moments of waiting for a response on the bill to protect the UK home market, which has already passed two rounds in the House of Commons and is now awaiting a response from the Lords. The prolonged process and the characteristic ambiguity before the new round of negotiations between England and Brussels may lead to new leaps in the market, as soon as information on the law or criticism of the European side during the negotiations appears.
Now, it is worth paying special attention to the information flow, since this is the only instrument for impressive changes for the pound.
At the same time, the topic of the second wave of coronavirus is gaining impulse in the media, where an increase in indicators is recorded almost daily. Boris Johnson admitted that a second wave of COVID-19 is starting in the country and did not rule out the adoption of the most stringent measures, up to a new national lockdown.
If countries go to the next quarantine measures, and the growth of virus infections continues to grow, we can expect that the market will collapse again.
In terms of the economic calendar, we do not have significant statistics on Britain and the United States today, but there will be another round of trade negotiations between England and Brussels, which may arouse speculators' interest.
Further development
Analyzing the current trading chart, you can see the variable price fluctuations within the previously established boundaries of 1.2900/1.3000, where the quote is concentrated in its lower part. It can be assumed that the noise of the information and news background will continue to divide into market participants, where the most optimal trading tactic is the breakdown of the established boundaries with an orientation to key values.
Based on the above information, we will display trading recommendations:
- We consider sell positions below the 1.2860/1.2885 area, towards 1.2770.
- We consider buy positions above 1.3035, with the prospect of moving to 1.3110.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on minute and hourly intervals signal a sell due to price concentration within 1.2900. In turn, the daily interval also signals a sell, reflecting the inertial movement set by the market on September 1.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month / Quarter / Year.
(It was built considering the time of publication of the article)
The current time volatility is 59 points, which is 52% below the average. It can be assumed that due to the information background, speculative mood will continue to boost the market's activity.
Key levels
Resistance zones: 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 1.2885 *; 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).
* Periodic level
** Range level
*** Psychological level
