4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
The GBP/USD currency pair continued to adjust on Monday as a whole if the movement that we have been observing in recent days can be called that at all. The pound/dollar pair has painfully halved above the moving average line but is unable to continue moving north. Thus, the downward trend remains relevant. Both linear regression channels are still directed downwards, and the growth of the British pound by 100 points does not even pull back. Thus, the British currency still occupies a very weak position in the "dispute" with the US dollar. There are simply no bulls on the market right now, which, by the way, is confirmed by COT reports, according to which the number of sell contracts of the "Non-commercial" group is almost twice as large as the number of buy contracts. Consequently, the mood for the pound remains "bearish", and what we are seeing now is just a small respite. Of course, as we said this weekend, after Wednesday and Thursday (when the Fed and Bank of England meetings will be held), the technical and fundamental picture may change. Especially if the first or second bank makes any high-profile decision. If everything goes according to plan (that is, the Fed will simply reduce its QE program by $ 15-30 billion, and the BA will simply not change anything), then it is the US currency that can take off all the cream, because this will mean that the Fed continues to tighten monetary policy, and the BA continues to beat around the bush.
The dispute between the UK and France continues.
So, the UK is very reluctant to issue licenses to French vessels to fish in British territorial waters. At the beginning of the year, we repeatedly said that the agreement on Brexit and the trade deal was signed literally on the knee, almost under the chimes. It can hardly be called comprehensive and well-developed. And now, almost a year after the completion of Brexit, both sides are facing the consequences of such a superficial agreement. After all, Britain does not issue fishing licenses for a reason. According to the same trade deal, there are several nuances. First, a permit for fishing is issued with a quota condition and only for a certain period (now it is 5 years). Second, some sources report that fishing near the English Channel is possible only if French fishermen prove that they have been fishing there for years. We are talking primarily about small boats and simple boats. Naturally, ordinary fishermen who do not have specialized equipment cannot prove that a couple of years ago they also caught fish here. And the British authorities refuse them permission to catch, which leads to various rallies and actions by fishermen against the actions of the British authorities. In principle, France, like the entire European Union, can easily and simply punish London. The fact is that 75% of the fish catch is sold by British fishermen to EU countries. Thus, the elementary rejection of British imports of fish and seafood can significantly dampen the ardor of Boris Johnson and his colleagues. According to various political scientists and experts, France and other EU countries may also follow one of their favorite paths - bureaucracy. That is, for example, to complicate the procedure for checking imported fish until such a time when this fish simply dies in ports. Experts also note that in fact, neither France nor the UK is particularly interested in the "fish" issue. For Britain, fishing accounts for only 0.1% of GDP. And for France, we are talking only about a hundred boats and vessels, which is also not much. The issue could easily be resolved amicably since there are no serious losses for either the former or the latter. However, politics comes into play here. Emmanuel Macron cannot help but "prick" his British enemy before the elections, which will be held in April next year. And Boris Johnson keeps the principle because of the need to win at least a small victory in his post after a series of failures in recent years.
The average volatility of the GBP/USD pair is currently 73 points per day. For the pound/dollar pair, this value is "average". On Tuesday, December 14, we expect movement inside the channel, limited by the levels of 1.3155 and 1.3303. The upward reversal of the Heiken Ashi indicator will signal a new round of upward correction.
Nearest support levels:
S1 – 1.3214
S2 – 1.3184
S3 – 1.3153
Nearest resistance levels:
R1 – 1.3245
R2 – 1.3275
R3 – 1.3306
Trading recommendations:
The GBP/USD pair has started a corrective movement on the 4-hour timeframe. Thus, at this time, new long positions with targets of 1.3306 and 1.3336 levels should be considered in case of a new close above the moving average. Sell orders can be considered if the price is fixed below the moving average with targets of 1.3214 and 1.3184.
Explanations to the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which trading should be conducted now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.
CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
