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From a complex analysis point of view, we fix a significant acceleration, where the quotes returned to the middle level of the range. Market activity is amazing, it seems that only recently we were on the verge of resuming the medium-term trend when the quotes approached 1.3200, and now we are touching the average level of the range [1.2770 // 1.2885 // 1.3000], leaving behind a solid impulse stroke. In fact, the existing movement won back 69% of the correctional move on 02/28/20/09/02. It is worth considering such a moment that speculation is raging on the market, at which such extraordinary leaps arise, which are often unstable, and with the slightest advantage of the trading forces, the picture changes again.
In light of the recent move, the theory of downward development has again become relevant, the quotes have returned to the range of [1.2770 // 1.2885 // 1.3000], which means that there is a chance of a descent to the level of 1.2770 . If we proceed from the fact that rapprochement with the level of 1.2770 is not the first, then its strength, and most importantly, the pressure will be lower, and the chance of its breakdown increases. As an example, we refer to the coordinates 1.2885 and 1.3000, which systematically radiated pressure, but with consistent testing, its strengths came to naught. Let me remind you that the breakdown of the 1.2770 area will lead to a new stage in the theory of downward development, where it comes to the restoration of a relatively medium-term upward trend.
In terms of volatility, we see an ultra-high indicator of 245 points, which is 137% higher than the average daily value. In fact, we record not just high values, but the first accelerated acceleration since the beginning of the year, where the average daily indicator is overcome at a systematic level. Such a high activity on the markets focuses on speculators, and this can lead to local disturbances in tacts.
Details of volatility: Friday - 193 points; Monday - 110 points; Tuesday - 102 points; Wednesday - 102 points; Thursday - 107 points; Friday - 103 points; Monday - 165 points; Tuesday - 245 points. The average daily indicator, relative to the dynamics of volatility is 103 points [see table of volatility at the end of the article].
Detailing the day by minutes, we see that from the very beginning of the day the quotes took a downward position and went down to the level of 1.2869. The most significant acceleration occurred at the time of the American session.
As discussed in a previous review, intraday traders looked at the 1.3045 / 1.3090 framework for which action was taken. Sales positions were opened after passing the 1.3045 mark.
Considering the trading chart in general terms [the daily period], we see an impressive V-shaped fluctuation, which is still concentrated in the structure of the medium-term upward movement. The extreme link of the upward trend was in the region of mid-December, which indirectly confirms the instability of the existing trend and the possibility of its change.
The news background of the past day did not have any worthwhile statistics on Britain and the United States.
In terms of the general information background, we have characteristic pressure, and so, the coronavirus is increasingly conquering Europe, including Britain, where the United Kingdom's Minister of Health is getting sick against such a terrible background. Panic spurs speculators who are ready to jump on any rustle. In turn, no one forgot about the negotiations between England and Brussels regarding trade interactions after Brexit, where, according to Michel Barnier, there are four difficult points. Until the second round of negotiations, the head of the European Commission, Ursula von der Leyen, urges Britain to think about the economic compromises that it is ready to accept if it refuses EU requirements.
"We are aware that there are differences in how much the future agreement should have and what, if I may say so, the rules of the game that everyone should follow. Therefore, it is important that the UK makes a decision - the more they want to have access to a single market, the faster they should start playing by the rules, which are the rules of a single market. If this is not a choice for the UK, then, of course, it will be more difficult for them to gain access to a single market, "said Ursula von der Leyen.
Today, the Bank of England added fuel to the fire, which during an emergency meeting lowered the base interest rate to 0.25% [50 basis points] against the backdrop of the situation with coronavirus. In fact, the regulator repeated the story of the Federal Reserve System, which was the first to launch such an extraordinary "flash mob" last week.
"Lowering the bank rate will help support business and consumer confidence in difficult times and support the cash flows of businesses and households," the regulator said.
In terms of statistics, today we are waiting for the final data on Britain's GDP for the fourth quarter, where they forecast a slowdown in economic growth from 1.2% to 0.8%. At the same time, data on industrial production will be published, where the decline will accelerate from -1.8% to -2.7%. In fact, macroeconomic indicators are not in favor of the pound sterling. In the afternoon, we are waiting for inflation data in the United States, where they expect slowdowns from 2.5% to 2.3%, which may put pressure on rumors about a possible next reduction in the Fed's refinancing rate.
Further development
Analyzing the current trading chart, we see that the surge in activity was associated with breaking news from the Bank of England, but the market was somehow ready for such a turn, and given the fact that Andrew Bailey commented that week that the bid does not lower below 0.1%, the market received a kind of insurance. The fluctuation of the quotes locally lowered the pound to 1.2833, but then only a shadow remained from such a significant move. In fact, we see a speculative mood where the quotes may return to the area of the psychological level of 1.3000.
From an emotional attitude point of view, we see a high coefficient of speculative positions, and the external background is the support of this attitude.
By detailing the time segment that we have per minute, we see that the price spike came in two-minute candles 06:00 - 06:01, where the quotes managed to fly over 100 points (!!!). Subsequent hesitation was in terms of recovery.
In turn, speculators have already swept on the impulse and left it, now a subsequent analysis is underway, where they are waiting for the continuation of the banquet.
Having a general picture of actions, we see a 100% recovery relative to the current impulse, so we should not exclude the possibility of a price return to the area of 1.3000. At the same time, I would look at the dynamics relative to minute intervals, since the emergence of new impulses is possible and here the tactics of work will be according to the method of entering the market in an inertial candle. As you may have guessed, work on the situation continues due to the strong external background. The main strategy for the downgrade also remains, especially with the available news, the medium-term outlook has received another trigger signal.
Based on the above information, we derive trading recommendations as follows:
- Local purchase positions are considered higher than 1.2955, towards 1.3000
- Local sales positions are considered lower than 1.2900, towards 1.2870-1.2800.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that due to the available pulses, the indicators' indicators began to give out variable signals without a clear direction. So, the minute periods worked at the recovery stage relative to the impulse, the signal is variable. Hourly periods are running in a downward direction, which was set yesterday. The daily plot is more in the neutral phase than in the upward phase.
Volatility per week / Measurement of volatility: Month; Quarter Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(March 11 was built taking into account the time of publication of the article)
The current time volatility is 120 points, which already exceeds the average daily indicator by 16%. It is likely to assume that the background and speculative mood will continue to catch up with activity in the market while maintaining the specified acceleration.
Key levels
Resistance Zones: 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Areas: 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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