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From a complex analysis point of view, we see a gradual upward course, where the quotes are still under pressure from the psychological level of 1.3000, considering the coordinates as a conditional support point. In fact, we have an attempt to confirm the previously posed theory of the Zigzag-shaped model dated 12/03/19 to 01/14/20, where the quotes quite accurately draw the next measure. In the case of maintaining the mood, we will see the embodiment of tact in the direction of 1.3122. At the same time, another discussion arose among traders, which considers the current fluctuation as a local strengthening of the pound, but retaining its characteristic's ambiguity. It still has restraining factors that can affect the formation of lateral movement after an upward oscillation.
The two theories that we have touched on are somewhat similar since in a general examination of the trading chart, the quotes are already moving sideways with an extremely large swing range, and the current compression seems to prepare the quotes for something more.
In terms of volatility, we have a rather interesting picture, where, from the beginning of the trading week the average daily amplitude decreases we simply say, 95; 79; 57 points, which suggests the preparation for the future rally. Meanwhile, from an emotional component point of view, we see that on a daily basis, there are impulse candles which confirms the preservation of speculative interest in the market.
Parsing the past minute by minute, we see two impulse moves [09: 30-11: 30 (Down); 12: 30-13: 00 (Up)], where the second move turned into a kind of inertia, setting a local upward movement.
As discussed in the previous review, traders as early as Tuesday went into local long positions from the value of 1.3015. The emphasis in the judgment consisted of the laws of the rebound from the psychological level and the theory of the Zigzag-shaped model.
Considering the trading chart in general terms [the daily period], we see that the quotes are conditionally at the top of the upward movement which was set back in early September, which means that the decline has not yet been fully played out after the local cross to 1.3513.
The news background of the past day contained data on inflation in the United Kingdom, where they expected to maintain its level by 1.5%, but as a result received a decrease to 1.3%. In fact, we received one more signal of an early rate reduction by the Bank of England.
Market reaction to statistics was almost instantaneous in terms of local weakening of the pound.
In terms of the general informational background we had, the most significant event of the week seems to be the ceremony on signing the first phase of a trade deal in the White House with the participation of US President Donald Trump and Vice Premier of the State Council of the PRC Liu He. In fact, the process and details of the transaction were expected in advance, however, there was a noise that put pressure on the market.
In turn, the Brexit continues to retain media interest. So, there was news that the European Parliament will ratify the Brexit agreement at the end of the month. At the same time, the head of the European Commission [EC], Ursula von der Leyen, noted that the transition period will begin in February, where Brussels is ready to work day and night on an agreement.
"By the middle of the year, it will be clear at what stage we will be. The EC head added that Brussels is ready to move in the upcoming negotiation process as soon as possible, working day and night on an agreement, "said Ursula von der Leyen.
In terms of the economic calendar, we have the statistics for the United States today. So, the rates for applications for unemployment benefits should decrease, but only by 6 thousand [Repeated -11 thousand; Primary +5 thousand.]. At the same time, we have retail sales data, which should slow down from 3.3% to 2.9%.
Further development
Analyzing the current trading chart, we see the conditional standing at the place where a small range of 1.3035 / 1.3055 was formed. In fact, we still have a local upward interest, and the psychological level of 1.3000 still puts pressure on the quotes.
In terms of volatility, we have extremely low indicators, maybe due to the basis of compression, the very acceleration that everyone is talking about will happen.
By detailing the time interval we have, we see a kind of attempt to resume the downward movement at 05:15 [time on the trading terminal], but the restraint of market participants does not allow us to leave the range.
In turn, traders continue to work locally with long positions from the value of 1.3015, having a partial exit in the very range where we are now.
Having a general picture of the actions, it is possible to assume that the theory of the Zigzag-shaped model is still taking place in the market, thus one should not exclude the move to the level of 1.3122 in case of price-fixing higher than 1.3055. At the same time, the formation of a flat of 1.2955 / 1.3055 is also not excluded, therefore, a partial fixation of long positions is carried out.
Based on the above information, we derive trading recommendations as follows:
- There are buy positions from the value of 1.3201, where the first fixations took place in the area of 1.3050. Positions are held in the direction of 1.3100 to 1.3122. If there are no deals, then it makes sense to wait until the price fixation is higher than 1.3055.
- We consider selling positions in two versions: first, local positions in case of price-fixing lower than 1.3035, with the prospect of a move to 1.3000-1.2985; The second option is the main one and is considered after a clear fixation of the price lower than 1.2955.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments are based on downward interest, but at the same time, locally displaying a correctional course relative to intraday periods.
Volatility per week / Measurement of volatility: Month; Quarter Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(January 16 was built taking into account the time of publication of the article)
The volatility of the current time is 22 points, which is still an extremely low indicator. It is likely to assume that there is still a chance of acceleration, it is worth following the points of price-fixing.
Key levels
Resistance zones: 1.3180 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 1,3000; 1.2885 *; 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
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
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