11.08.202013:28 Forex Analysis & Reviews: Trading recommendations for the GBP/USD pair on August 11

The GBP / USD pair once again consolidated in the area of the psychological level of 1.3000, where the quote immediately formed a pullback, after which it completely got stuck on the levels 1.3060 / 1.3100.

The movement of the pound had many ticks that intersect in time frames and analysis. The foundation of the whole process is the inertial move from July 20, which led to a change in price ranges 1.2150 // 1.2350 // 1.2620 ---> 1, 2770 // 1.3000 // 1.3300. It was due to this movement that the pound found itself in a difficult situation, where long positions were so overheated that a slowdown occurred, which led to a fluctuation within the levels 1.3000 / 1.3185.

This fluctuation is the same as what was observed in the beginning of the year (January-February), where the interaction of trade forces led to a reduction in the volume of long positions, which, in turn, stopped the movement.

Thus, based on the graphical analysis, the fluctuation at 1.3000 / 1.3185 signals a market reversal, starting from the "Double Top" in the four-hour TF. A similar model can be seen on the EUR / USD pair, with which the situation with overheating of long positions is very much the same. However, the model is quite unstable, so the pattern could evolve into a "Triple Top" instead, which is considered the most stable in terms of development in the market.

Meanwhile, in terms of daily dynamics, a 25% deceleration of volatility relative to the average level of 112 ---> 84 points is recorded, which suggests that activity in the hourly periods are highly speculative.

Hence, if we analyze the past trading day by minutes, we can see that speculative jumps occurred at 10: 30-14: 30, where a V-shaped pattern appeared, after which activity subsided, forming a looped fluctuation at 1.3060 / 1.3100.

This is because as discussed in the previous review , traders worked on a consolidation at the price level of 1.3000, with a subsequent rebound after it.

So, analyzing the trading chart in general terms (daily period), we will see that there was no correction nor a rollback, and the candlestick structure has many Doji formations, which signals ambiguity and readiness for a future surge in activity.

The news published yesterday included data on JOLTS, which, instead of a reduction in vacancies, a growth from 5,371,000 to 5,889,000 was observed. This surprising situation supported the US dollar to rise in the market.

Meanwhile in the UK, British Prime Minister Boris Johnson issued a statement about the opening of schools in September. According to him, "Closing our schools for longer than absolutely necessary is socially unacceptable, economically unsustainable and morally unjustified. Students must return to school in early September, a national priority for the country. Schools will be the last places to be closed in case of future local quarantines. "

Thus, Britain is again imposing the strict use of masks, as the situation with COVID-19 in the country has not yet been taken under full control.

Today, data on the UK labor market will come out, in which the unemployment rate is expected to be 3.9%, the same level it has for the third month in a row. However, there are questions about the reliability of the information provided by the office of national statistics.

Further development

Analyzing the current trading chart, we can see that the price continues to fluctuate, within the levels 1.3060 / 1.3100. Local bursts of activity were recorded in these areas, but a clear breakout has not yet been observed.

Thus, the best strategy is to break out from the established boundaries, in which the quote will form a "Triple Top", or reach and breakout of the psychological level of 1.3000.

So, based on the above information, we present these display trading recommendations:

- Sell positions below the level of 1.3060, targeting a drop to the price levels 1.3020-1.3000. The main move will occur, after the quote consolidates below 1.2950.

- Buy positions above the level of 1.3110, targeting a rise to the price levels 1.3145-1.3180.

Indicator analysis

Analyzing the different sectors of time frames (TF), we can see that the indicators of technical instruments on the minute and hourly periods currently signal "buy", but it may change soon due to the price fluctuation within the price range 1.3060 / 1.3100. Meanwhile the daily period, as before, signals "buy" due to the general trend, but if the price falls below the level of 1.2950, this may change as well.

Weekly volatility / Volatility measurement: Month; Quarter; Year

The measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.

(August 11's was built, taking into account the time this article is published)

Volatility is currently 45 points, which is 59% below the average daily value. It may increase though, as soon as the quote breaks out of the range 1.3060 / 1.3100.

Key levels

Resistance zones: 1.3200 (1.3250) **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support Zones: 1.3000; 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); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.

* Periodic level

** Range level

*** Psychological level

Also check the brief trading recommendations for the EUR / USD and GBP / USD pairs here .