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The GBP/USD pair continues to show active downward interest, during which the important price level 1.2770 was broken, where sellers had the opportunity to change the medium-term trend. The total decline is more than 800 points since the beginning of September, and the quote is already at the levels of mid-July. However, there is an assumption that this is only the beginning of a long journey.
Now, traders are considering a decline as a second option for the March collapse, although there are many inconsistencies. The market favors emotional behavior, so you can expect everything and even more.
Looking at the above mentioned, it is worth noting that the pound sterling has gained a lot in recent years (July-August), and its overbought status was known to every market participant, and a small push was enough to change the speculative interest.
If we analyze yesterday's fifteen-minute TF, you can see three inertial movements at once. The first surge in activity occurred during the start of the Europeans at 5:00-7:45 UTC+00, where the level 1.2770 was broken in the downward direction. The second surge occurred from 7:45 to 10:45 UTC+00, where local long positions arose by about 140 points. The third surge started from 11:00 14:45 UTC+00. It had a downward shape, which brought us back to the bottom of the first surge.
In terms of daily dynamics, an acceleration of 25% relative to the average level is recorded. The volatility indicator was 156 points, and you can take this activity several times within the day. Moreover, it is clearly seen that speculative excitement rules the market.
As discussed in the previous analytical review, traders were focused on a further decline in the pound if the quote was kept below 1.2770.
Looking at the trading chart in general terms (daily period), we can see that the recovery relative to the medium-term upward trend is 38% relative to the current update of the local low.
The previous news background had data on home sales in the secondary market of the United States, which rose by 2.4% against the forecast of growth of only 0.9%. The indicator is excellent, but at this time, the information background plays the main role in the market.
On the other hand, the second wave of coronavirus and restrictive measures to fight it are highlighted. The UK, which detects 4,000-6,000 new cases of infection every day, has re-introduced quarantine measures, limiting the opening hours of bars, pubs and restaurants, as well as toughening penalties for violations of restrictive measures, in particular self-isolation and mask regimes.
The British Prime Minister said that the government will introduce new restrictions in England, which are carefully selected in order to minimize the virus reproduction rate, while minimally disrupting people's daily routine and their financial well-being.
The new restrictive measures will take effect this Thursday and are designed for a six-month period. In addition, the residents of the country were told in a recommendatory form that it is better to continue working remotely from home.
This background strongly affects the market, in particular, the pound's value, which was in a precarious situation even without the coronavirus. There will be a growing pressure on the pound, and on top of that, the Brexit issue is almost done, where nothing good is expected. Thus, speculators will still have the opportunity to ride high market surges.
Today is PMI day in terms of the economic calendar, where preliminary data on the PMI in Britain and the United States will be published with a forecast of a slight decline. In any case, the information background will continue to play a leading role in the market, and news will be in the background.
Great Britain 8:30 Universal time - Forecast for September index of business activity in the manufacturing sector: from 55.2 to 53.8.
Great Britain 8:30 Universal time - Forecast for September index of business activity in the services sector: from 55.8 to 55.1
USA 13:45 Universal time - Forecast for September index of business activity in the manufacturing sector: from 53.1 to 53.1.
USA 13:45 Universal time - Forecast for September index of business activity in the services sector: from 52.0 to 54.1.
Further development
Analyzing the current trading chart, we can see that the quote is fixed at new levels, and market participants are aiming at the first coordinate 1.2620. The breakdown of which will lead to a further decline in the direction of the values 1.2500-1.2350.
In turn, pullbacks and local corrections are possible as the trading forces regroup and the information background emerges.
Indicator analysis
Analyzing different sectors of time frames (TF), we see that the indicators of technical instruments on the hourly and daily periods signal a sell due to consecutive price decline.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated per Month / Quarter / Year.
(It was built considering the time of publication of the article)
The volatility of the current time is 66 points, which is 46% below the average. It can be assumed that volatility will continue to grow if speculative mood persists.
Key levels
Resistance zones: 1.2770 **; 1.2885 *; 1.3000 ***; 1.3200; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support zones: 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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