The V-shaped formation is what we got in return for the downward movement, where the quote failed to stay in the stream of short positions. Moreover, a new round of activity arose around the level of 1.2566 which caused the pound to return to the point of variable resistance.
Is it worth considering the return of the price as a signal of the resumption of the upward trend? This will be clear from the fixation points relative to the local maximum of the past week, but what can be said for sure is that the US dollar has come under sale once again.
Regarding the emotional component of the market, here, as before, speculators are operating, which are driving the market with excitement and volatility.
Friday's news background contained data on producer prices in the United States, where they predicted a slowdown in the decline from -0.8% to -0.2%, but as a result, the indicator remained at the same level [-0.8%], which had a strong impact on the US dollar in terms of its weakening.
In terms of informational background, news appeared that the UK plans to invest approximately £ 705 million in border infrastructure in connection with Brexit. These costs directly signal that England is preparing for the fact that the transaction may not be at the end of the transition period, which means that between the parties there will be a need for customs and border checks.
Based on the document, the amount is divided into two parts according to estimated costs: 470 million pounds goes for the construction of directly new border infrastructure in British ports and 235 million pounds will be spent on software development, as well as the preparation and employment of 1,500 new border guards.
In turn, from a recent survey of Britain's business environment, it was revealed that only a quarter of the companies in the United Kingdom are ready for the end of the transition period, while all the rest will still experience stress that will lead to losses and the halt of some processes.
As we can see, Brexit is still relevant among traders, and not the best background associated with it gives additional interest to market speculation.
Today, in terms of the economic calendar, we do not have statistics on the United Kingdom and the United States. But we have a speech by Bank of England President, Andrew Bailey and New York Federal Reserve President, John Williams through online conferences on Libor.
15:30 Universal time - online conferences on Libor
From the point of view of a comprehensive analysis, we see how the quote came close to the local maximum of the previous week 1.2668, where there was a slowdown on a systematic basis, as a fact, an insignificant price rebound. At this stage, you should be extremely careful, since a breakdown of the maximum can lead to speculative activity. The only thing that stops us from a surge in activity is that the economic calendar is empty, and tomorrow, we have the final inflation data in the United States, depending on which the Fed's actions will be understood, namely, will the regulator expand the program of quantitative easing or not .
The burning forecast is that our task is to monitor the situation within the maximum of 1.2668, since price consolidating above it can lead to a local surge in activity in the direction of the range of 1.2770. In case of keeping the quote below, a variable fluctuation between the range of 1.2615/1.2670 is not excluded.
Based on the above information, we derive trading recommendations:
- Consider sell deals lower than 1.2645, towards 1.2620.
- Consider buy deals not just above the maximum of the previous week 1.2668, but above 1.2686, which reflects the surge on June 16th. The perspective of the course is directed towards the range level of 1.2770.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments relative to hourly and daily periods signal a purchase by consolidating the price above 1.2620. Minute intervals, in turn, have a variable signal, working on a rebound from the maximum of the past week.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Volatility measurement reflects the daily average fluctuation, calculated for the Month / Quarter / Year.
(July 13 was built taking into account the time of publication of the article)
The volatility of the current time is 45 points, which is 60% lower than the daily average. It can be assumed that in case of a breakdown of the 1.2668/1.2686 area, a round of speculation will occur, which will lead to an increase in volatility.
Key levels
Resistance zones: 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 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); 1.1300; 1.1000; 1.0800; 1.0500; 1.0000.
* Periodic level
** Range Level
*** Psychological level
