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The GBP / USD pair traded at a range of 1.2865 / 1.3000, during which it tried to return to the upper levels of the current channel. The correction, which started from the local low of 1.2674, has been going on for two and a half weeks already, as a result, a change in market tact may occur, especially in light of a consolidation higher than 1.3050 on the daily chart.
For the most part, the chaotic price jumps that occurred are just natural, considering that the market is very much controlled by the emotions of traders over news such as the coronavirus crisis, capital outflows and unsuccessful Brexit.
So, in the M15 time frame, speculative activity surged at 10: 30-11: 45, and during it, the pound declined sharply by about 70 pips. After that, the quote stopped moving and then moved upwards.
In terms of daily dynamics, October 8 recorded the lowest indicator for seven trading days, amounting to just 79 points, which is 35% below the average level. Today, the same low dynamics was observed, but relative to the hourly time frame, an acceleration can be seen in terms of movement.
This is because following the previous review , traders set up their positions within the range 1.2865 / 1.3000. Their work is based on the following scenarios: a local surge; movement from the border; breakout from one of the borders.
Thus, when we look at the daily chart, we will see the ongoing correction, but then there is a strong resistance at the level of 1.3000.
With regards to news, important statistics were published yesterday, but they did not influence much the rate of the currencies in the market. The latest report on the US labor market, although indicated a decrease in jobless claims, were still above pre-crisis highs, which means that it is still going through hard times in US history. Initial applications have reduced from 849,000 to 840,000, while repeated ones have decreased from 11,979,000 to 10,976,000.
Meanwhile, in the United Kingdom, a slowdown in the recovery of the industrial sector was recorded, with which the data turned out much worse than forecasts.
The upcoming trading week has a number of important statistics scheduled for publishing, however, the market will most likely be controlled by the sentiment of traders towards news over Brexit.
Tuesday, October 13
UK 07:00 - Unemployment rate (August)
UK 07:00 - Jobless claims (September)
UK 07:00 - Average level of wages, with and without premiums (August)
US 13:30 - Inflation (September)
Wednesday, October 14
US 13:30 - Producer Price Index (September)
Thursday, October 15
US 13:30 - Jobless claims
Friday, October 16
EU 10:00 - Inflation (September)
US 13:30 - Volume of retail sales (September)
US 14:15 - Volume of industrial production (September)
Further development
As we can see on the trading chart, the pound reached the same peak yesterday (1.2970), after which it stopped moving and closed there.
Now, if the price does not move higher than 1.2975, a premature rebound may occur, which will lead to another downward move in the direction of 1.2900-1.2880.
Indicator analysis
Indicators in the hourly and daily timeframes (TF) signal BUY due to price fluctuations in the upper range of the correction.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Volatility is measured relative to the average daily fluctuations, which are calculated every Month / Quarter / Year.
(The dynamics for today is calculated, all while taking into account the time this article is published)
Volatility is currently at 49 points, which is 60% below the average level.
It is presumed that bursts of activity in relatively shorter time intervals will continue, and it will become a catalyst for acceleration in the GBP / USD pair.
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
Also check trading recommendations for the EUR/USD pair here.
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