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The GBP/USD currency pair, which is in the correction stage from the local low of 1.2674, reached an important price level of 1.3000, where there was a natural slowdown in the market. Analyzing the coordinates of 1.3000 in detail, a high degree of concentration of trading forces can be seen, where a rebound in the opposite direction was observed relative to the period of September 16-18.
The sequence of fluctuations in the market allows the trader to know in advance about the rebound or acceleration of the price. In this case, everyone is focused on the psychological level, where the quote came up.
If we proceed from the downward tact set in the market in the previous month, the chance of resuming short positions is still high as long as the quote is below the level of 1.3000, since everything can radically change if the price is consolidated above it in the daily period.
Analyzing yesterday's trading day by the fifteen-minute, you can see that the round of long positions started at 7:15 and lasted until 13:30 UTC+00, after which there was a slowdown. Meanwhile, the level of 1.3000 was approached this morning.
In terms of daily dynamics, the lowest indicator for 7 trading days is recorded, it amounted to 90 points, which is 28% below the average level. It should be noted that speculative interest persists in the market, which means that there may be a surge in new activity at any moment.
As discussed in the previous analyst review, traders viewed the psychological level of 1.3000 as a resistance level, which could support short positions.
Looking at the trading chart in general terms (daily TF), we can see a two-week corrective move with a scale of more than 300 points, but it still does not violate the cyclical nature of the downward move set on the market in September.
Yesterday's news background had an index of business activity in the British services sector, which came out ahead of the curve, growing from 55.1 to 56.1. Here, the market was already inclined upwards and it is unlikely that the statistics were recouping.
In the afternoon, a similar index was published for the United States, where it was confirmed at 54.6, but at the same time, the ISM non-manufacturing PMI showed an increase from 62.4 to 63.0.
At that moment, the market changed from the growth stage to the slowdown stage.
In terms of the information background, Brexit and COVID-19 are considered hot topics, where Heiko Maas, German Foreign Minister, believes that the pandemic greatly complicates the process of negotiations between England and Brussels.
In turn, journalists asked British Prime Minister, Boris Johnson if he was worried about the prospect of leaving the EU without a deal in light of the second wave of the COVID-19. He replied that he does not want such a result, but, in his opinion, Britain was more than capable of surviving it.
Let me remind you that the negotiations were given extra time, and the final day is now in the middle of November. The intensity of emotions will continue to grow, and we should not forget that the US presidential election will also be held by that month, which means that speculators will be twice as active.
In terms of the economic calendar, the index of business activity in the UK construction sector for September will be published today, where a slight decline is predicted.
In the afternoon, data on open vacancies in the United States will be published, where they are expected to grow from 6 618 thousand to 6 685 thousand, which may benefit the US dollar.
Further development
Analyzing the current trading chart, price fluctuations within the 1.3000 level can be seen, where market participants are trying to implement the natural basis of the rebound, as it happened in the previous period. This scenario will be the most favorable if the price consolidates below 1.2965, in the direction of 1.2900.
The alternative scenario will be considered if the price consolidates above 1.3000 on the daily TF, which will lead to a change in the downward tact set in September.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on minute TF have a variable buy/sell signal due to the stagnation stage. Meanwhile, hourly and daily TFs signal buy by focusing the price within the level of 1.3000.
Weekly volatility / Volatility measurement: Month; Quarter; Year
The volatility measurement reflects the average daily fluctuations, calculated per Month/Quarter/Year.
(It was built considering the publication time of the article)
The dynamics of the current time is 36 pips, which is 71% below the average. We can assume that such a low volatility indicator will be temporary, and an acceleration will follow very soon.
Key levels
Resistance zones: 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 1.2770 **; 1.2620; 1.2500; 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411).
* Periodic level
** Range level
*** Psychological level
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