From the point of view of complex analysis, we see a breakthrough of variable stagnation, and now let's talk about the details. Last trading week concentrated on ourselves several fluctuations at once, and so, we had an intense downward movement at the beginning of the week, which led to the level of 1.2246. Afterwards, there was a recovery and against which, the quote concentrated at a mirror level of 1.2350. A gradual swing, with a deviation of 30/50 points from the mirror level, stretched to the very end of the trading week.
Making another comparison with the euro/dollar currency pair, it can be seen that the dynamics of Friday did not coincide, the pound continued to concentrate on the variable range, while the single currency was rapidly strengthening.
Considering the fluctuation, it becomes clear that the acceleration characteristic of the euro on Friday, came to the expanses of the pound only on Monday, which led to a breakdown of the variable range of 1.2300 / 1.2385.
Regarding the theory of downward development, it is still impossible to say that everything was lost. The quote is still in a state of partial recovery, and in order for the theory to fail fundamentally, the quote needs to be consolidated above 1.2620 / 1.2650.
In all that is happening, the theory of the formation of the "Head and Shoulders" pattern, which was discussed already in the middle of last week, becomes interesting. So, the formation of the model held on the enclosing right shoulder, where we were talking about a move towards 1.2400–1.2480, which as a result we have at the current oscillation. The implementation of the pattern remains in question, since with the current formation, we should see a reverse move towards the 1.2250 mark, where the neck line is located. Let me remind you that the "Head and Shoulders" pattern was revealed on the daily chart.
In terms of volatility, we record that Friday's dynamics were the lowest in two weeks of counting, which signaled a slowdown. In fact, it becomes clear now what traders focused on during the accumulation, which led to a breakdown of the variable borders of the flat.
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; Tuesday - 227 points; Wednesday - 108 points; Thursday - 126 points; Friday - 198 points; Monday - 116 points; Tuesday - 217 points; Wednesday - 131 points; Thursday - 122 points; Friday - 42 points; Monday - 87 points; Tuesday - 146 points; Wednesday - 193 points; Thursday - 119 points; Friday - 114 points; Monday - 86 points; Tuesday - 198 points; Wednesday - 111 points; Thursday - 106 points; Friday - 78 points. Daily average
As discussed in a previous review, traders focused on a mirror level of 1.2350, where the main positions were for sale with price consolidating lower than 1.2300, which did not happen. At the same time, our alternative deal came to profit already at the current trading day.
Considering the trading chart in general terms [the daily period], price fluctuations can be seen at the conditional peak of the upward trend 03/20/20-14/04/20, where it is necessary to overcome the level of 1.2150 for the onset of a complete recovery process. Otherwise, the status of the measure will not change.
Friday's news background contained macroeconomic data on retail sales in the UK, where they recorded a decline of -5.8% in March with a forecast of a decline of -4.5%.
In the afternoon, data on the volume of orders for durable goods in the United States for March was published, where the decline was -14.4% with a forecast of -11.9%.
The consequences of the coronavirus pandemic are increasingly visible to investors.
In terms of the general informational background, we have the British Prime Minister Boris Johnson, who returned from his illness, who will start working on April 27. So, his first step will be the announcement of a plan to ease the quarantine regime in the United Kingdom, and now the prime minister is discussing with the ministers the idea of modifying the quarantine regime, but it should be noted that this is not about the abolition of quarantine measures.
In turn, during a press conference last Friday, the EU's chief representative at the talks with the United Kingdom, Michel Barnier, expressed dissatisfaction with the lack of progress in the discussions between the parties.
"We cannot accept selective progress only on a limited set of topics, we need to make progress on all topics in parallel. We need to find solutions to the most difficult topics. The United Kingdom cannot refuse to extend the transition period and at the same time slow down discussions on important areas." said EU's chief negotiator.
Michel Barnier also added that the British side made it clear that it rejects any extension of the transit period.
Today, in terms of the economic calendar, we do not have statistics on the UK and the United States worthy of attention, thereby continuing to monitor the information background.
Further development
Analyzing the current trading chart, we see that a surge in the activity of long positions came in the period of the Pacific and Asian sessions, where a breakdown of the alternating flat of 1.2300/1.2385 occurred. An interesting point is that the activity switched to a decline at the start of the European session, which makes the speculative interest clearly visible during inactive sessions. With this development, it is worthwhile to understand that local acceleration in one direction can be replaced by another direction, and the region of 1.2450 / 1.2500, plays the role of a kind of resistance. In this case, local overcrowding will be a kind of lever for sellers.
In terms of the emotional mood of market participants, it has already been said that speculative interest prevails in this period, and it will continue to be held in the market.
In turn, traders have already recorded profits on the passage of a variable flat. Now, a reverse movement is being considered, in the case of developing the area of 1.2450/1.2500.
We can assume a temporary chatter at the values of 1.2450 / 1.2500, where it is worthwhile to carefully monitor the behavior of the quote, since with the existing activity, bursts can occur very quickly.
Based on the above information, we derive trading recommendations:
- We consider selling positions lower than 1.2400, towards 1.2350.
- We consider buying positions higher than 1.2455, towards 1.2500.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments on hourly and daily periods signal a purchase, which reflects the current movement in the market.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(April 27 was built taking into account the time of publication of the article)
The volatility of the current time is 94 points, which is 32% below the daily average. It can be assumed that, with existing activity, the dynamics will continue to persist within the daily average activity.
Key levels
Resistance Zones: 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: 1.2350 **; 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.
* Periodic level
** Range Level
*** Psychological level
**** The article is built on the principle of conducting a transaction, with daily adjustment
