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From the point of view of a comprehensive analysis, you can see slow movements, but even with it, the quote managed to reach an area of an important level, and now let's talk about the details. The last trading week managed to combine both acceleration and deceleration, where there was a jump in long positions in the beginning, which led the quote to the area of interaction of the trading forces 1.2240/1.2280. After that, the sluggish recovery process began, where, at low dynamics, market participants managed to return to the area of 1.2150/1.2180.
As it turns out, the recovery process played out a surge in long positions by approximately 60%, and this is already a significant part of the course, where the chance of further decline is high.
Regarding the medium-term development, the sell signal is still maintained,which comes from the main trend, as well as from the downward tact set on the first of may. It is worth noting that the recovery process is in an active phase, but for subsequent signals, market participants need to overcome the minimum of may 18, as well as the psychological mark of 1.2000. In this case, sellers will have a much better chance to keep their mood in the direction of historical lows.
As discussed in the previous review, traders are working on recovery, where the movement to the level of 1.2150 was initially considered, which was considered a local position. The main transactions should occur after the price consolidates lower than 1.2140.
In terms of volatility, unusual restraint is recorded, where the market participants are sluggish for the third day in a row: 65 ---> 64 ----> 72 points. It is worth recalling that the average daily indicator is 132 points, such low values have not been seen for a long time on the pound. In this case, the slowdown in volatility is more than just adaptation, there is an assumption that we have a kind of accumulation that will lead to a sharp acceleration of activity, on the basis of which control levels will be broken. Confirmation of the theory of accumulation can come from the divergence of activity between the euro/dollar and pound/dollar pairs, where the volatility of the single currency has remained high for a week.
Considering the trading chart in General terms [the daily period], it is worth highlighting the one and a half month flat, which has already been broken through in the downward direction, which is a good signal for medium-term development.
Friday's news background contained data on retail sales in Britain, where the decline accelerated from -5.8% to -22.6%, and this is the most significant decline in a quarter of a century.
The market reaction to the statistics was not in favor of the pound sterling.
In terms of the general informational background, we see that there were no sharp news for the background over the weekend, but they are not needed when there are already enough problems in the country: with the consequences of quarantine measures, a possible negative rate by the Bank of England and unsuccessful negotiations on trade relations after Brexit.
Today, in terms of the economic calendar, we do not have statistics worth paying attention to. In addition to everything in Britain and the United States, today is a holiday, which means trading volumes will be reduced.
Further development
Analyzing the current trading chart, you can see sluggish activity within the area of 1.2150/1.2180, where the quote found a foothold. In order to move to a new stage, market participants need to consolidate below 1.2140, in which case the chance of further decline will be higher.
It can be assumed that the area of 1.2150/1.2180 will continue to exert pressure on the quote, but this is not for long, as the accumulation process will play the role of a catalyst for trading forces, imparting acceleration to the market. Trading tactics are constructed using the 1.2140/1.2200 border breakdown method, where the main transactions continue to be considered in a downward direction.
Based on the above information, we derive trading recommendations:
- Selling positions are considered below 1.2140, with the prospect of a movement to the levels of 1.2080 - 1.2000.
- Buying positions are considered in terms of local transactions, in case of price consolidation higher than 1.2200, towards 1.2250.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments on hourly and daily continue to indicate a downward mood, signaling a sale.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(May 25 was built taking into account the time of publication of the article)
The current time volatility is 28 points, which is considered an extremely low indicator for this time section. Accumulation continues, which is likely to lead to a significant jump in activity, but it is worth considering that in connection with the closed markets of the USA and Britain, accumulation with low volatility may persist today.
Key levels
Resistance Zones: 1.2250; 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: 1.2150 **; 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 is built on the principle of conducting a transaction, with daily adjustment
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