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The pound / dollar currency pair showed weak volatility of 65 points once again, eventually having a pullback from a key level. Now, we will analyze in the current article what will lead to the indecision of market participants.
From the point of view of technical analysis [TA], we see an insignificant rollback that arose at the moment the range level of 1.2770 [1.2750 / ( 1.2770 ) / 1.2800] was touched, where the quote is rather measured, with low volatility and a drop of indecision went into the pullback phase. Whether it is good or bad, time will judge, but now, we can say one thing, this is another chance for sellers who want to restore the quote. In fact, if this is the case, then the existing pullback, with low volatility, is a platform for regrouping trading forces, and sellers are still on the market. It is still too early to draw conclusions, since the price is still above the range level and there is a risk of a return to the psychological level of 1.3000, but one of the theories can be taken into service.
In terms of the emotional mood of market participants, there is a distinct restraint, although there is a proper saturation of the information background. Most likely, the characteristic ambiguity in the Brexit action plan plays a role, which directly affects the actions of market participants. The second theory reflects the effect of the crowd adapting to the background, where the reaction of market participants is made exclusively on the main events, and not on secondary ones. The third theory reflects an extremely strong overheating of the market, which occurred on the inertial course of October 10–21, where market participants took a break after such a strong overheating.
Analyzing the past hourly hour, we see a sluggish wobble, where only two candles can be distinguished from the whole day 12: 00-13: 00 [UTC+00 time at the trading terminal], after which there was a sharp compression with a horizontal course until the end of the day 1.2850 / 1, 2870.
As discussed in the previous review, speculators initially worked to decline, but the quote did not succeed in hitting the control coordinate of 1.2770, as a result of the hovered trading, where traders went to work on the situation. Thus, speculators who do not have deals, and those who wanted to work on alternative positions, began to actively analyze the possibility of a ride on a local pullback, which, in principle, succeeded 1.2840 ---> 1.2860. Holding short positions previously opened were fixed with a small "Loss" within 1.2864, but not all traders decided to do this, and, in principle, this is the right decision so far, since there have been no price fixes and punctures by shadow are not taken into account. Thus, further positions for the purchase above 1.2865 were not pledged either.
Considering the trading chart in general terms [the daily period], we still do not lose the hope of a full recovery with respect to the inertial course. The range level of 1.2770 plays the role of a support, but the characteristic overbought still persists in the market, and if it were not for the ambiguity effect that looms on the market, the 1.2770 level would fall rather quickly. From the discussions of previous reviews, it can be recalled that in the period of a twelve-year review of the chart, the trend is always downward. In the period of a year and a half, a downward trend is also maintained, but with the prerequisites of a fracture.
The news background of the past day again did not have statistics on Britain and the United States, which cannot be said about the information background.
Therefore, in terms of information flow, we have a considerable array, we will analyze its successor. Yesterday, it became known that the European Union agreed to extend Britain's exit from the EU from October 31 to January 31, 2020 with the note that the United Kingdom has the right to leave the EU ahead of schedule if it manages to ratify the agreement.
Boris Johnson agreed with the EU decision to postpone Brexit.
"As you know, I have no freedom of choice ... to do anything other than confirm British official consent to postpone Brexit. But I must clearly state that the extension of Britain's membership in the EU harms our democracy and relations with our European friends. I would prefer the British Parliament to quickly ratify the deal we have reached. Unfortunately, I am extremely worried that the parliament may never do this and, therefore, further postponement of Brexit is possible, "Johnson said in a letter.
The British prime minister also called on the EU to inform the British Parliament that there would be no more deferrals.
"I won't let the parliament just prolong the membership in the European Union again and again," Boris Johnson said in a letter
A few hours after the EU announced the approval of a new postponement, the results of voting on early parliamentary elections appeared. The House of Commons rejected Prime Minister Boris Johnson's proposal to hold this election. For the proposal of Johnson to hold the elections on December 12, 299 voted against - 70, the rest abstained.
After another defeat, the Prime Minister announced that the government intends to submit to the vote on Tuesday a new proposal for early elections by another procedure, which requires only a simple majority.
In turn, the head of the Labor Party continues to maintain a firm stance, insisting on the complete exclusion of the female Brexit, even in formulations.
"We will carefully study the bill of the Prime Minister ... But we will demand the exclusion of the possibility of leaving the EU without a deal. This should be stated clearly, but the Prime Minister has previously used any language so as not to pronounce this phrase, "said Labor leader Leviticus Jeremy Corbyn, speaking in parliament.
Today, in terms of the economic calendar, we have data on lending in Britain, where, in principle, indicators are maintained at the same level: Volume of consumer lending, 0.901V ---> 0.900V; The number of approved mortgage loans, 65.55K ---> 65.00K; The volume of mortgage lending, 3.85V ---> 3.80V. In turn, the information background will continue to discuss Brexit divorce proceedings and early parliamentary elections.
Further development
Analyzing the current trading chart, we see a rather sluggish fluctuation within the periodic resistance of 1.2865. In fact, there are prerequisites for further slowdown with the formation of periodic boundaries, where the lower border of 1.2800 is the echoes of the range level of 1.2770, and the upper border of 1.2865 is the accumulation point that appeared last Friday.
Detailing the constantly fluctuating movement, we see that at night, 11: 45-12:15 UTC+00 [time on the trading terminal], a local surge of short positions occurred at low volumes. After that, a 100% recovery, as if someone in the Pacific-Asian trading session closed his previously open long position, locally drawing a surge in the low liquidity gap.
In terms of the emotional state of the market, we continue to observe restrained interest without sharp fluctuations and high volatility.
In turn, some traders continue to hold previously open short positions with the hope of restoring the initial move. At the same time, alternative transactions in case of breakdown of the level of 1.2865 are not overlooked.
It is possible to assume that a decline in volatility will lead to a temporary horizontal fluctuation of 1.2800 / 1.2865, where it is better to work using the breakdown method than working within the range. At the same time, I would advise you not to rush into actions and make sure that the breakdown is non-local in the form of a shadow puncture, and there is proper price fixing with support for the inertial move. Meanwhile, work in terms of monitoring the news feed for information regarding Brexit continues.
Based on the above information, we derive trading recommendations:
- We consider purchase positions in the case of a clear price fixing higher than 1.2865, with an exit higher than 1.2875, after which entry into the market is considered.
- Some traders already have selling positions, if we don't have any deals, then we analyze the value of 1.2800. In this case, the approach is considered in such a way that after a technical pullback, sellers will be able to re-head towards the range of 1.2770 and, nevertheless, breaking through it. If you do not want to take risks, it makes sense to wait for the price fixing already below the range level of 1.2770 [1.2750 / ( 1.2770 ) / 1.2800].
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators in the short term have taken a downward position against the background of working out the estimated upper boundary of the horizontal course. On the other hand, the intraday perspective is in the phase of a technical pullback while the medium-term outlook invariably retains upward interest, still working in the inertia phase.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(October 29 was built taking into account the time of publication of the article)
The volatility of the current time is 26 points, which is an extremely low indicator for this time section. It is likely to assume that a characteristic stagnation will benefit future volatility, and in case of breakdown of the existing framework, we will see the same acceleration.
Key levels
Resistance Zones: 1.3000; 1.3170 **; 1.3300 **.
Support areas: 1.2770 **; 1.2700 *; 1.2620; 1.2580 *; 1.2500 **; 1.2350 **; 1.2205 (+/- 10p.) *; 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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