The GBP/USD currency pair on Tuesday, as well as the EUR/ USD pair, tried to start an upward correction, but at the same time very quickly abandoned these attempts and resumed falling. In principle, everything that we reported in the article on EUR/USD is also relevant to the pound/dollar. The reasons for the fall of the British currency are almost the same. This is a set of reasons that has been, is, and will be in the near future. Traders have been holding back from new sales of the euro and the pound for a long time, but at the end of last week, they still could not stand it. As a result, we see a new fall. Is it worth talking about the trend of the pair at all now? All trend indicators are directed downwards. Even the CCI indicator, which entered the oversold area a couple of days ago, which is a strong signal for an upward pullback, failed to provoke the growth of the British currency. Thus, the correction will begin sooner or later anyway, but now the question is quite acute, when will it begin? As you can see, the bears have become more active and are actively getting rid of the euro and the pound.
At the same time, now we would take the liberty to conclude that there is some groundlessness in what is happening. Yes, the pound still looks weaker than the US dollar. Because of the divergence in the monetary approaches of the Bank of England and the Fed, because of the geopolitical conflict in Eastern Europe. However, the general fall of the British currency even in the last few days looks somehow too strong. But at the same time, the geopolitical background may continue to deteriorate and will continue to provoke more and more purchases of the US dollar and sales of the pound and euro. Unfortunately, the geopolitical background can deteriorate almost indefinitely. Or before the Third World War. Unfortunately, this is not a joke. Many experts and political scientists do not believe that a nuclear war will begin, but even if the war is not nuclear, who will feel better about it? At the moment, it is completely unclear what is happening in Transnistria, what the Kremlin's reaction will be to Finland and Sweden joining NATO, and in response to official Tokyo's statement about the "Kuril Islands annexed by Russia", Moscow has already included Japan in the list of "unfriendly countries", in which half of the world is now located. Therefore, it is unclear where in the world a new geopolitical conflict will break out and how many new participants will appear in it.
Finland and Sweden want to join NATO at the same time.
In principle, there is nothing more to say here. The Finnish Parliament has already voted "in favor" of applying for membership. In Sweden, the Parliament may approve this decision a little later. The countries have even agreed to apply together, for which Finland will slow down its accession process a little. Recall that both countries remained neutral in relation to various blocs and alliances. Sweden - since 1834, Finland - since 1949. And until February 24, 2022, when Russia invaded Ukraine for the second time, these countries did not even think about joining NATO. However, after February 24, the mood of the population of these countries changed dramatically, the Swedes and Finns began to fear that sooner or later the Russian Federation would want to conduct a "special operation" on their territory. Therefore, the decision to join NATO at the state level has become practically a request of the residents of these countries. Sweden also stated that in the event of a Russian invasion, they would need not just military assistance, but the protection of a strong organization with the introduction of foreign military units. In Stockholm, they want to get real military protection in the event of a military conflict, not ammunition. Alliance Secretary-General Jens Stoltenberg has already said that the principle of open doors operates in NATO, and applications from Finland and Sweden can be considered under an accelerated procedure. Recall that Finland has the longest land border with Russia. Moscow has already expressed a "note of protest" and warned Stockholm and Helsinki that they would regard this step as unfriendly and would be forced to take action. It remains only to understand what these measures will be.
The average volatility of the GBP/USD pair over the last 5 trading days is 132 points. For the pound/dollar pair, this value is "high". On Wednesday, April 27, thus, we expect movement inside the channel, limited by the levels of 1.2492 and 1.2756. The upward reversal of the Heiken Ashi indicator signals the beginning of an upward correction.
Nearest support levels:
S1 – 1.2634S2 – 1.2573
Nearest resistance levels:
R1 – 1.2695R2 – 1.2756
R3 – 1.2817
Trading recommendations:
The GBP/USD pair continues its strong downward movement in the 4-hour timeframe. Thus, at this time, you should stay in sell orders with targets of 1.2573 and 1.2492 until the Heiken Ashi indicator turns up. It will be possible to consider long positions if the price is fixed above the moving average line with targets of 1.2939 and 1.3000.
Explanations of the illustrations:
Linear regression channels - help 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 to trade 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.
