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An unusual low dynamics is recorded for the GBP/USD currency pair for the third day in a row, where the quote focuses within the variable level of 1.2500. At the beginning of the slowdown, everything was very clear. There was no trading volume due to the weekend in the United States, with the advent of the new week there were no restrictions on volumes, but activity is still low, so what is the reason? If we analyze the correlated EUR/USD currency pair, it will be seen that with the opening of markets on Monday, volumes and, as a matter of fact, speculations arose that almost returned the market relative to last Friday. On the other hand, the European currency was rising from scratch, while the pound conditionally stood still, concentrating in fluctuations of 30-50 points. This kind of stagnation signals the indecision of market participants to take actions that can lead to drastic changes, but at the same time, it is a signal of accumulation, which can be used by speculators in local operations on the market.
In terms of the economic calendar for the past day, we had data on the index of business activity in the UK construction sector in June, where an increase was recorded from 28.9 to 55.3 with a forecast of 47.0. The result of the PMI is inspirational, and given that an indicator above 50 is positive for the pound, the fact that the market has stood indicates emotional restraint.
The ISM index of business activity in the services sector for July in the United States was published in the afternoon, where growth was from 45.4 to 57.1 with a forecast of 50.1. If we consider the fact that the ISM index is a kind of indicator of the state of the service sector in the US economy, then the fact that there is no reaction on the market is not very clear again, which confirms the fact of speculative accumulation, which goes across the fundamental analysis.
In terms of informational background, quarantine measures in the United Kingdom were relaxed, but this already does not affect the general mood of investors, such as, for example, the strong disagreement in the negotiations between England and Brussels on the Brexit trade agreement. Traders are closely monitoring the progress of negotiations, as this is a conditional barometer of the mood of the pound sterling in the near future.
Today, in terms of the economic calendar, there are only JOLTS data on the number of open vacancies in the United States, where they are predicted to decline from 5,046 thousand to 4,500 thousand.
USA 14:00 Universal time - The number of open vacancies in the JOLTS labor market in May
From the point of view of complex analysis, we see accumulation in the range of 1.2480/1.2520, which has a temporary weight of approximately 22 hours. This process arose in the existing flat range 1.2437/1.2530, which indicates a high degree of restraint of market participants to action.
The burning forecast is that the double stage of slowdown with a high degree of probability will lead to a local surge in speculative activity, due to which we will be able to earn. The trading method based on the breakdown of one or another accumulation borders 1.2480/1.2520.
Based on the above information, we derive trading recommendations:
- Consider buy deals in case of price consolidating higher than 1.2520, with the prospect of a move to 1.2550. In the case of price consolidation above 1.2550 in a four-hour period, we will open the way towards the level of 1.2620.
- Consider sell deals below the level of 1.2475, with the prospect of a move to 1.2440. In the case of price consolidation below 1.2435 in a four-hour period, we will open the way towards the level of 1.2350.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the performance of technical instruments relative to hourly and daily periods signal a purchase, due to the concentration of prices within the level of 1.2500. In turn, minute intervals have a variable signal due to the movement of quotes within the accumulation.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the daily average fluctuation, calculated for the Month / Quarter / Year.
(July 6 was built taking into account the time of publication of the article)
Volatility of the current time is 34 points, which is 70% lower than the daily average. It can be assumed that in the event of a breakdown of one or another accumulation boundary, local acceleration will occur, which will lead to an increase in volatility.
Key levels
Resistance Zones: 1.2500; 1.2550 *; 1.2620; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Zones: 1.2350 **; 1.2250; 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.
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