4-hour timeframe
Technical details:
Higher linear regression channel: direction - sideways.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -38.6780
The British pound continues to move within the "swing" mode. Over the weekend, we assumed that neither the trend line on the hourly timeframe nor the increase in the pound/dollar quotes in recent days would help the British currency to continue its growth, which is illogical from a fundamental point of view but expected from a technical point of view. For the pound sterling, everything is now so complicated that the foreign exchange market participants do not understand what to do with this currency. What do other traders do with this currency? The pound fell on the first trading day of the week. It also fell, as did the European currency. But the European currency fell as part of a continuing upward trend that has lasted for three weeks, and the pound fell as part of a new round of downward movement in the "swing." All this leads either to the absence of a trend movement but with constant corrections and pullbacks. On the 4-hour timeframe, it isn't easy to work out such movements. Thus, the technical picture is now ambiguous when looking at the 4-hour timeframe. If you look at the daily timeframe, on the contrary, everything becomes clear. The upward trend continues for the pound, and it is much stronger than for the euro currency, and the last correction within this trend is much weaker than for the euro currency. Thus, it is the pound that has a much greater chance of resuming growth in 2021. But in the case of the pound/dollar pair, everything will no longer depend on the trillion-dollar stimulus packages in the US, but also on the speculative factor that helped the British currency to climb so high and stay so high at a time when you want to close your eyes to the fundamental background from the UK and forget it as soon as possible. If you compare the state of the EU and the UK, it is obvious that everything is much worse in Britain. Suppose anyone wants to correlate the growth of the euro and the pound in the last year. The European Union lost only one country out of 27, and Britain lost a market of 400 million. The United Kingdom in the coming years may lose at least Scotland and get a new bloody conflict on the island of Ireland. And before it began to recover, the British economy shrank by 20%, and the European economy - by 11% (data from the second quarter of last year). Thus, the high vaccination rates in the UK now do not play a role. They play a very indirect role. Recall that when, in epidemiological terms, things were much worse in Britain than in the European Union, the pound also grew. Thus, "the pound is growing due to the high rate of vaccination of the population" - this is not an explanation for what is happening at all. For what other reasons can the pound grow, or more precisely, at this time "not fall"? Only at the same prices as the European currency. All the same trillions of dollars are pouring into the American economy, increasing the dollar supply in all markets. But at the same time, if you remove the "speculative factor," the pound may show a local fall, as the euro showed at the beginning of the year. That is, everything now depends on the traders themselves. If blind faith in the pound's growth persists, then the pound itself has a great chance of continuing to grow in 2021. If traders slowly start to close longs, the pound may still rise in price in 2021, but on a smaller scale. All the other fundamental events and reasons are just an attempt to explain what is happening with the British currency. Many traders and experts are now frantically trying to explain why the pound sterling rose by 28 cents in the last "Brexit" year, while it fell by about the same amount in the previous three "pre-Brexit years"? And they are all trying to find a black cat in a dark room. The state of the economy, the epidemiological situation, "lockdowns," the pace of recovery, the actions of central banks, tax increases, trade wars, the yield of American treasuries – traders perceive all this as the reasons for what is happening in the market. Still, as soon as the movement changes, they throw out one or another reason and try to pick up a new one from a strictly limited "list." The list of reasons is a dark room. Each reason is a gray cat that is at least a little visible in the dark. But there are no black cats (real reasons) in the dark rooms of most traders and experts.
The long-term forecast was sorted out. In the short term, we believe that the swing-type movement will continue. At the same time, the pair can resume a downward correction, resume an upward trend, and move sideways, but at the same time, the movement of the type "300 points up – 250 down – 280 up – 320 down" will continue, from our point of view. Now everything is so unstable and ambiguous for the pound that it is quite difficult to imagine a different scenario. By the way, the COT reports partially confirm our assumption. If you look at how the mood of professional traders has changed over the past year, you can conclude that it has changed constantly, almost every 2-3 weeks. That is, in most cases, the big players themselves did not know and did not understand what to do with the pound sterling. Therefore, we recommend trading the pound using the lowest timeframes.
The average volatility of the GBP/USD pair is currently 80 points per day. For the pound/dollar pair, this value is "average." On Tuesday, April 27, we expect movement within the channel, limited by the levels of 1.3808 and 1.3968. A reversal of the Heiken Ashi indicator to the top may signal a new round of upward movement within the "swing."
Nearest support levels:
S1 – 1.3855
S2 – 1.3794
S3 – 1.3733
Nearest resistance levels:
R1 – 1.3916
R2 – 1.3977
R3 – 1.4038
Trading recommendations:
The GBP/USD pair started a round of downward movement on the 4-hour timeframe. Thus, today it is recommended to trade downwards with a target of 1.3808 if the price overcomes the moving average before the Heiken Ashi indicator turns up. Buy orders should be opened in the event of a price rebound from the moving average with a target of 1.3968 and keep them open until the Heiken Ashi indicator turns down.
