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From the point of view of complex analysis, we see another rebound from the range-psychological level of 1.3000, where the quote locally returned to the point of interaction of the previous correction move. In fact, the value of 1.3080 plays the role of a variable level of resistance again, locally slowing buyers and forming a rebound. Another regularity that we encountered reflects the repetition of the fluctuation of the period of January 14–16. Now, the question arises whether the similar downward movement that took place in the past period can be repeated. To answer this, we have a theory of the Zigzag-shaped model, which sequentially forms phases. The structure of the model has three correction phases, where each subsequent phase is expressed by compression.
[The first phase - 609 points, 12/13/19 (High) 12/23/19; The second phase - 329 points, 12/31/19 (High) 01/14/20; The third phase - 155 points, 01/17/19 (High) 01/20/20]
The pulsed phases confirm the theory of compression, having approximately 50% development of the previous phases.
Regarding the psychological level, we see obvious pressure on the quote, where traders assume the formation of a local flat together with the theory of slowdown.
In terms of volatility, we see an insignificant acceleration compared to the day before, but it is still not enough to talk about cardinal changes.
Analyzing the past minute by minute, we see the process of rebound from the control level, where the main impulses occurred during the period 8:30–12:00 [UTC+00 time on the trading terminal]. The subsequent move was in terms of deceleration and reverse.
As discussed in a previous review, speculators considered local long positions from 1.3215 in terms of the next beat of the Zigzag-shaped model.
Considering the trading chart in general terms [the daily period], we see an increasingly significant slowdown relative to fluctuations from the beginning of the new year, where virtually everything that happens is at the peak of the medium-term upward trend.
The news background of the past day included statistics for the UK, where unemployment at 3.8%, as well as the number of applications for unemployment benefits, did not have significant changes. The driver for the pound sterling was employment data, where the growth was 208 thousand, taking into account the forecast of 104 thousand. Moreover, a decline in the positive was also the average wage excluding premiums, where the slowdown was 3. 4%, instead of slowing from 3.5 to 3.3%
The market reaction to macroeconomic statistics was lightning fast and the pound sterling rushed into a local impulse move.
In terms of the general informational background, we have a fuss over the long-playing Brexit. The Britain itself still cannot approve the withdrawal agreement, while the European Commission is discussing possible sanctions in case of non-compliance with the rules of the future agreement. In turn, the House of Lords, where the Brexit deal is currently under negotiation, is literally delaying approval, insisting on amendments regarding the status of foreigners with EU citizenship after Brexit. Yet, it is worthwhile to understand that the House of Lords has no authority to cancel the bill, it can only return it back to the Lower House as amended, so there is no need to worry.
In turn, Boris Johnson said that he was preparing a change in the migration system during the British-African Investment Summit, which would become more equitable after the country's exit from the EU. Let me remind you that the system is now designed so that British companies cannot offer work to a resident of a non-European country without first considering applications from applicants from EU countries. That is, the criteria for knowledge of English, the presence of a sponsor company and the level of salary bypassed EU residents.
Today, in terms of the economic calendar, we have data on borrowings in the public sector in Britain, the volume of which can be reduced by 4.6 billion pounds. In the afternoon, data on the real estate market in the United States, where sales in the secondary market may grow by 1.3%, will be released.
Further development
Analyzing the current trading chart, we see an obvious stop, having a small amplitude of fluctuation. In fact, the quote feels a periodic ceiling above itself, which is reflected from the past measure. In turn, the Zigzag-shaped model continues to compress, possibly having a fourth correction phase. In view of the already full compression, the new phase can transform into a flat, where the psychological level will remain the control level [1.3000]
In terms of the emotional mood of the market, we see restraint, but this is all due to the slowdown that is evident.
By detailing the per minute portion of time, we see a sluggish recovery with a small amplitude of about 40 points, where there are actually 1.3035 / 1.3080 boundaries.
In turn, speculators with local long positions fixed them yesterday, having received a small profit. Now, the strategy is aimed at identifying the main impulses, where they operate on the current range, as well as on control levels.
Having a general picture of actions, it is possible to assume that the fluctuation within the boundaries of 1.3035 / 1.3080 will not last long and we will definitely see a breakdown. Thus, the trading strategy is divided into local moves and the main ones, that is, when one or another breakdown is broken, we do not enter the full volume, after which we focus on the coordinates and fixation points relative to 1.2950 and 1.3180.
Based on the above information, we derive trading recommendations:
- Buy positions are considered in terms of the local move, in case of price fixing higher than 1.3090, with a move towards 1.3115-1.311-1.3180. Further actions are taken after fixing the price higher than 1.3140.
- Sales positions are considered in terms of the local move, in case of fixation lower than 1.3030, with a move in the direction of 1.3000-1.2980. Further actions are taken after fixing the price lower than 1.2950
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical tools have turned around locally, having a buy signal due to the recent phase. The medium-term period invariably retains downward interest.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(January 22 was built taking into account the time of publication of the article)
The current time volatility is 32 points, which is an extremely low indicator. It is likely to assume that even a breakdown of the current range can give activity to the market, and the volatility will easily exceed the daily average if the Zigzag-shaped model is completed.
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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