FX.co ★ Trading recommendations on GBP/USD for April 23, 2020

Concentration of trading forces within the mirror level is observed. The variable support point of 1.2250 and the 400 points course of the resistance level did not go unnoticed. Quotes went into local correction and met the familiar mirror level of 1.2350. Actual price fluctuations within the 1.2350 level reflect a peculiar regrouping of trading forces, which means that the mirror level can still give us due acceleration.

Downward move is still possible. Further acceleration may still be triggered by the theory of compression, which can break the control points and resume the main trend. Correlation between EUR / USD and GBP / USD remains, so a similar scenario may reflect with the pound, that is, the development of recovery process relative to March 20-April 14's course.

To further understand the theory and intentions of the single currency, read this article .

A round of long positions started at the European session yesterday. Quotes managed to locally overcome the mirror level of 1.2350, and subsequent fluctuation occurred along the level of 1.2350 before the close of the daily candle.

In the previous review , traders considered lowering the rates by working out the resistance level of 1.2350. The adjustment happened, but the turn was only enough to reach the value of 1.2300.

Volatility is still lower than the daily average by about 26%. Nevertheless, it is still above the 100 points mark, which indicates that the slowdown is still too early.

Details of volatility: Monday - 165 points; Tuesday - 245 points; Wednesday - 172 points; Thursday - 358 points; Friday - 359 points; Monday - 144 points; Tuesday - 271 points; Wednesday - 676 points; Thursday - 354 points; Friday - 522 points; Monday - 267 points; Tuesday - 296 points; Wednesday - 333 points; Thursday - 452 points; Friday - 352 points; Monday - 148 points; Tuesday - 227 points; Wednesday - 108 points; Thursday - 126 points; Friday - 198 points; Monday - 116 points; Tuesday - 217 points; Wednesday - 131 points; Thursday - 122 points; Friday - 42 points; Monday - 87 points; Tuesday - 146 points; Wednesday - 193 points; Thursday - 119 points; Friday - 114 points; Monday - 86 points; Tuesday - 198 points; Wednesday - 111 points.

Outlines of the head and shoulders pattern can still be observed in the daily chart. To form the "right shoulder", the quote needs to show local upward interest in the direction of 1.2430–1.2470. However, the downward trend still remains.

Meanwhile, Britain's inflation data coincided with forecasts, recording a decrease from 1.7% to 1.5%.

Regarding quarantine measures, according to British Foreign Minister Dominic Raab, who is temporarily replacing the ill Prime Minister, the introduction of quarantine was not later than necessary, but strictly in accordance with the recommendation of doctors and scientists.

"The government has always followed the recommendations of doctors and scientists, and will continue to follow them ... I do not accept such accusations," said Raab, in response to questions and accusations last Wednesday.

Raab also said that the UK still has not passed the "peak" of the pandemic, and restrictive measures will be reviewed according to the official record of coronavirus cases and recommendations of scientists.

Downing Street previously provided a set of requirements to take into account when easing quarantine measures.

The key points are:

- Assurance that the National Health Service can cope with its work, and that the NHA can provide adequate level of necessary assistance throughout the UK.

- A steady and consistent drop in daily mortality rates, to be sure that the peak incidence in the UK is passed.

- Obtain reliable data from the Scientific Advisory Group on Emergencies, showing that the level of infection has decreased to acceptable levels in all areas.

- Guarantee that any adjustments to the current quarantine measures will not lead to the risk of a re-outbreak, which will become an unbearable burden for the health system.

Britain's preliminary data on business activity indices were published today, which turned out much worse than forecasts. Business activity in the service sector fell from 34.5 to 12.3, and production index fell from 47.8 to 32.9. As a result, the composite index fell from 36.0 to 12.9.

Terrible reports on the UK economy will not end soon.

A similar index for the US will be published in the afternoon. Nothing good is expected. The weekly data on US unemployment benefits will also come out, where the volume of initial applications is expected to be 4,545,000, and the number of repeated ones is expected to be 13,000,000.

Further development

Fluctuation along the mirror level of 1.2350 is observed in the current trading chart. Regrouping of trade forces will lead to a new round of activity. Considering the main movements, a downward move is not ruled out.

Meanwhile, market activity is fixed within the framework of accumulation, which is a sign of a high coefficient speculative interest.

Traders continue considering short positions, but the fluctuation drives market focus to the local framework.

Downward move may remain, where main positions will occur after consolidation below 1.2300. With the local acceleration, overcoming April 21's low [1.2246] may be possible.

Based on the above information, we drew these trading recommendations:

- Consider short positions below 1.2300, towards 1.2250. Consolidation below opens path to the main level of 1.2150.

- Alternatively, consider long positions if the price consolidates above 1.2390, going towards the direction of 1.2430–1.2480.

Indicator analysis

Indicators of hourly and daily periods continue to signal sales, which reflects general interest. Minute intervals are in variable chatter.

Volatility per week / Measurement of volatility: Month; Quarter Year

Volatility measurement reflects the average daily fluctuation, calculated per Month / Quarter / Year.

(April 23 was built, taking into account the time of publication of the article)

Current volatility is 67 points, which is 44% below the average daily value. Local accumulation incase of a break of the frames 1.2300 / 1.2380 is expected.

Key levels

Resistance zones: 1.2350 **; 1.2500; 1.2620; 1.2725 *; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Areas: 1.2280 (1.2240); 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1,0500; 1,0000.

* Periodic level

** Range Level

*** Psychological level

**** The article was built based on the principle of conducting a transaction, with daily adjustment