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Over the past trading day, the pound / dollar currency pair showed a reduced volatility of 72 points. As a result, the quotation developed in a sluggish range. From the point of view of technical analysis, we see that the resistance level of 1.2500 continues to hold the quotation, where as a result, a sluggish fluctuation has formed within 1.2440 / 1.2500. A kind of slowdown came to us from the standpoint of the American dollar, where the pressure subsided to some extent, and variable uncertainty continued to persist in the English currency.
As discussed in the previous review, speculators worked in the recovery phase once again from the level of 1.2500, where expectations coincided almost 100%. The quotation went down to 1.2430-1.2450, and then stagnation with local bursts. There were no other actions on the part of the traders, since there was no special movement either. Considering the trading chart in general terms (the daily period), we see that the phase of elongated correction will still remain in the market, where a distinct stagnation is drawn at its peak. Whether the quotation can work out the level of 1.2500 in the downward direction, until there is a clear answer, it is worth observing the fluctuation and the incoming information. In terms of the main trend, there are no changes yet, it is downward.
The news background of the past day contained data on inflation in Britain, where, as expected, there was a slowdown from 2.1% to 1.7% with a forecast decrease to 1.8%. The pound has locally declined in price, just in the recovery phase of short positions. In the afternoon, data were released on the construction sector in the United States, where the volume of new home construction increased from 1.215M to 1.215M, and the number of issued building permits grew from 1.317M to 1.419M. How did the statistics affected the US dollar? In general, nothing, because of the expectation of a key event. The focus of all market participants was the meeting of the Federal Committee for Open Market Operations, where, as expected, the refinancing rate was reduced by 25 basis points, and now we have a range of 1.75-2%. As previously noted, the news was expected, and the attention of traders was focused on the subsequent press conference, where Fed Chairman Jerome Powell announced the decisions of the regulator. Thus, the decision to reduce the rate was made to maintain the pace of economic growth and insure against risks. At the same time, the head of the Fed emphasized that there is no recession in the United States, and basic economic forecasts remain favorable. In fact, Jerome Powell dispelled all the fears of experts, and as a result - no sharp fluctuations in the market occurred. and basic economic forecasts remain favorable.
The information background contained variable comments regarding Brexit once again. Therefore, during the plenary session of the European Parliament, the head of the European Commission, Jean-Claude Juncker, indicated that the risks of Britain leaving the EU without a ratified agreement on the conditions of this "divorce proceedings" remain. At the same plenary session, the European Parliament supported the postponement of Britain's exit from the European Union. So, Brussels obliges London to provide substantial grounds for a delay, while at the same time maintaining free movement on the Irish border, as well as fulfilling financial obligations to the European Union, even in the event of a hard exit.
In turn, the leader of the Labor Party, Jeremy Corbyn, said that his party would remain neutral if a second Brexit referendum were held.
"Only the Labor government could end the Brexit crisis by returning the decision on it back to the people. I, as the Prime Minister, undertake to fulfill everything that people decide in the vote, "Jeremy Corbyn told The Guardian.
Today, in terms of the economic calendar, we have data on retail sales in the UK, where they expect a slowdown from 3.3% to 2.9%, which will burn local pressure on the British currency. In the afternoon, a meeting of the Bank of England is scheduled with the announcement of the refinancing rate. You should not expect anything important from the meeting, since while the Brexit process is ongoing, the Bank of England will not take any action. A press conference as such is not planned, but it may not be possible to stop the head of the Central Bank, Mark Carney, where afterwards, he may well give his sharp comments.
11:00 Universal time UK - Interest Rate Decision (Sep): 0.75%
Further development
Analyzing the current trading chart, we see that the quote is in a clear phase of accumulation with conditional boundaries of 1.2440 / 1.2500, where the volatility has gone down. The accumulation process in this case is a good sign even in terms of the fact that the level of 1.2500 plays its original role of resistance. If we carefully analyze the coordinates of 1.2500, then we will see that at the end of last year and the beginning of the current (12.12.18-04.01.19), the level perfectly played the role of the stop range, which is happening now. Traders, in turn, are in no hurry to prematurely act, working within the existing 1.2440 / 1.2500 boundaries is hypothetically possible, which is what speculators do, but working on the basis of breakdown would be most beneficial.
It is likely to assume that the amplitude fluctuation within the 1.2440 / 1.2500 border with a deviation of 25 points is possible for some time, but most likely, it will not last long. The first thing that can happen is to expand the statutory framework, a more important decision is to resume the movement.
Based on the above information, we derive trading recommendations:
- We consider buying positions in the case of a clear price fixing higher than 1.2530, with the prospect of a move to 1.2550-1.2620.
- We consider selling positions in the case of a clear price fixing lower than 1.2430, with the prospect of a move to 1.2380-1.2350.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that indicators on all major time periods signal an upward interest. It is worth taking into account such a moment that the indicators in the short and intraday period are currently volatile due to the accumulation process, as I wrote above.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(September 19 was built taking into account the time of publication of the article)
The volatility of the current time is 23 points, which is an extremely low indicator for this time section. It is likely to assume that the accumulation process and the ongoing decrease in volatility will lead to another surge, and you should be prepared for this. Probably, a breakdown of accumulation will lead to a surge, coupled with an information and news background.
Key levels
Resistance zones: 1.2500 **; 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) **.
Support areas: 1.2350 **; 1.2150 **; 1,2000 ***; 1.1700; 1.1475 **.
* Periodic level
** Range Level
*** The article is built on the principle of conducting a transaction, with daily adjustment
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