31.03.202011:39 Forex Analysis & Reviews: Trading recommendations for GBP/USD pair on March 31

From the point of view of complex analysis, we see a slowdown that brings significant changes, and now let's talk about the details. For the first time in a long time, market activity declined below the daily average, having a kind of slowdown within 1.2350. It is not believed that this can be considered the end of a long-running acceleration because the external background has not disappeared, and the calm before the storm is a frequent occurrence. Regarding the upward trend of the past week, one can single out the fact that 1000 points of the distance traveled did not go unnoticed, where asset overflows unambiguously began to occur, and a stop began to arise. Now, the main question is how much the dollar can grow?

In terms of further development, we have already mentioned in previous reviews that our tactics of work depend on the situation and the current fluctuation. That is, you should not focus on trends. At present, we had a rapid upward move and tomorrow a downward move of a similar scale can occur, you caught the logic. Nevertheless, the mechanics are simple. We analyze the external background and look at the fluctuation of the last day.

By detailing the past trading day, we see a quote returning to the level of 1.2350, after which the formation of a variable range of 1.2350 / 1.2440 with a concentration near the lower border.

In terms of volatility, we see just the very slowdown to 148 points, which is 16% lower than the average daily indicator. It is worth considering that the average daily dynamics of the pound / dollar pair before the escalation of the external background was approximately 100 points, where the slowdown often had a scale of 50-60 points. Now, the deceleration rate is 146% higher, which means that acceleration is still maintained in the market, having a very large scale.

Details of volatility: Monday - 165 points; Tuesday - 245 points; Wednesday - 172 points; Thursday - 358 points; Friday - 359 points; Monday - 144 points; Tuesday - 271 points; Wednesday - 676 points; Thursday - 354 points; Friday - 522 points; Monday - 267 points; Tuesday - 296 points; Wednesday - 333 points; Thursday - 452 points; Friday - 352 points; Monday - 148 points. The average daily indicator, relative to the dynamics of volatility is 177 points [see table of volatility at the end of the article].

As discussed in the previous review, traders viewed the framework of 1.2350 / 1.2500 as a starting point, eventually having short positions.

Considering the trading chart in general terms [the daily period], we see that March of the current year was one of the most active months in 4.5 years, where the quote managed to update historical lows and also form an amplitude of more than 1700 points.

The news background of the past day contained data on the UK lending market for February, where the number of approved mortgage applications fell from 71.344K to 73.546K, but it is worth noting that they expected a reduction to 65.206K.

In terms of informational background, we see that the COVID-19 virus continues to gain momentum, where more than 22 thousand people have already been infected in Britain alone and 1415 of them have been fatal. The analytical agency Capital Economics in its report states that the consequences of the pandemic will result in the decline of the UK GDP in the 2nd quarter by 10-20%, where you should not count on a quick economic recovery. In turn, British business is going through one of the worst periods, where at first everyone fled from the UK because of the country's exit from the EU [Brexit], now a pandemic hit the remnants. According to Lloyds Banking Group Plc, about three-quarters of the companies said they had been affected by the virus and had already suffered substantial losses.

We see that the consequences of the terrible virus are waiting for Britain ahead, but the problems will not end there, as the plans also include the country's exit from the European Union by the end of the year, where negotiations are already being dragged out.

Today, in terms of the economic calendar, we had the final UK GDP data for the fourth quarter, where we recorded a slowdown in economic growth from 1.2% to 1.1%.

There was no market reaction, as the indicators coincided with the assessment earlier.

Further development

Analyzing the current trading chart, we see the price concentration below 1.2350, where the quote still shows a characteristic restraint. It is worth paying attention to the period of the Asian session, where in the interval 12:50-12:55 [UTC+00 time at the trading terminal] speculative manipulations with the dollar took place, locally lowering the quote to the area of 1.2244. At this time, the overflow of assets is not yet completed, thus it is possible that surges in activity will return to the market in the very near future.

From the point of view of the emotional mood of market participants, we see that there are no signs of a slowdown, acceleration will continue to drive speculators, and the external background will support their interest.

In turn, traders with short positions have already managed to lock in at the moment of a surge in activity at night. Now, they are monitoring the dynamics of prices relative to the level of 1.2350, as well as the value of 1.2280.

Having a general picture of the actions, we can assume that the nightly surge was not the last and now, we need to follow the price fixing points relative to the values of 1.2280 / 1.2350 for planning future transactions.

Based on the above information, we derive trading recommendations:

- We consider buying positions in case of price fixing higher than 1.2370, with the prospect of a movement to 1.2445-1.2500

- We consider selling positions in case of price fixing lower than 1.2380 with the prospect of a movement to 1.2245-1.2200.

Indicator analysis

Analyzing a different sector of time frames (TF), we see that indicators of technical instruments on hourly and daily periods still signal purchases, but there are already signs of a change in interest. Meanwhile, minute intervals work on fluctuation within the level of 1.2350.

Volatility per week / Measurement of volatility: Month; Quarter; Year

Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.

(March 31 was based on the time of publication of the article)

The volatility of the current time is 171 points, which is already comparable to the average daily indicator. It is likely to assume that activity will increase as soon as we pass the given levels.

Key levels

Resistance zones: 1.2350 **; 1.2500; 1.2620; 1.2725 *; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.

Support areas 1.2150 **; 1.2000 *** (1.1957); 1.1850; 1.1660; 1.1450 (1.1411); 1.1300; 1,1000; 1,0800; 1,0500; 1,0000.

* Periodic level

** Range Level

*** Psychological level

**** The article is built on the principle of conducting a transaction, with daily adjustment