Using complex analysis, we saw abnormal stability in terms of volatility dynamics. After the quote managed to overcome the psychological level of 1.3000, everyone started talking about changing the timeframe, so the medium-term upward movement has not updated the highs for nine weeks, allowing the gradual downward movement to fix the quote below the control levels.
What can this change lead into?
Due to the prolonged upward trend, many traders have forgotten about global trends, so the upward movement remained. Although the medium-term upward trend made its own adjustments to the global market ticks, it did not cause major changes. If we focus on the medium-term course, we will see that the price passed the first stage of recovery [1.3000], which means that we automatically fall within the framework of steps # 1 [1.3000] and # 2 [1.2770]. This period is not easy, as it signals the beginning of the recovery process, which may cause ambiguity in the market for a while. Note that before stage # 2 [left to right] there was an inertial move in the form of acceleration, which can later facilitate the process of decline, where the third stage will be divided into two levels # 3 / 1-1.2620 and # 3 /2-1.2500.
In terms of volatility, we see a rather rare phenomenon, as the market dynamics has stable indicators at the level of 76 points for the fourth day in a row. This may signal a characteristic restraint, and the theory of price fixing is considered by traders.
Volatility details: Thursday-131 points; Friday-125 points; Monday-215 points; Tuesday-105 points; Wednesday-112 points; Thursday-79 points; Friday-79 points; Monday-74 points; Tuesday-74 points. The average daily indicator relative to the volatility dynamics is 94 points [see the volatility table at the end of the article].
Detailing the past day by the minute, we can see that after the stagnation within 1.2915, the quote still managed to rebound, showing local impulse sections from 09: 00-14: 30 London time [time on the trading terminal].
As discussed in the previous review , traders viewed the declinings positions as the main ones, si operations were held. In fact, the fluctuations within the range of 1.2885 / 1.3000 was taken into account, so traders with excessive volumes partially left in the area of 1.2885. Because of this, speculators continue to work on local jumps present on the market everyday.
Looking at the trading chart in general terms [the daily period], we can see the outlines of a possible recovery, relative to the medium-term upward movement.
Meanwhile, yesterday's news background included data on vacancies [JOLTS] in the United States, where they expected a growth of 7.0 million, but received a reduction from 6.80 million to 6.40 million.
Despite that, there was no market reaction, even though the dollar was slightly lower in price before the publication.
In terms of general information background, we have concerns related to the upcoming negotiations between England and Brussels. This time, the head of the European Commission [EC] Ursula von der Leyen gave her comments and stated that in the upcoming negotiations, she believes that striving for more is worth it. Moreover, she supports bilateral trade without customs duties, as well as the absence of trade quotas.
At the same time, the Chancellor of the Duchy of Lancaster, Michael Gove, believes that it is worth preparing for significant changes in trade between Britain and the EU, as well as for the long-term establishment of smart borders, including online processes.
While everyone is discussing the upcoming talks, Prime Minister Boris Johnson is preparing a transport revolution inside the country. He first announced a bridge between Scotland and Northern Ireland, and gave the go-ahead signal for the implementation of the High Speed 2 railway project, which should link London with the Northern part of the country.
"We will implement this project, and to ensure that we do not run out of schedule and do not go beyond the budget, we will take decisive measures, achieving the restoration of strict discipline in the implementation of the program," Boris Johnson said.
In today's economic calendar, no statistics for Britain and the United States are worthy of attention. As a result, we continue analyzing the technical part, and look at the information background.
Further development
Analyzing the current trading chart, we see that the assumption about the price returning to the limits of the 1.3000 level is practically implemented. However, keep in mind that the theory of fixing the fluctuations in the borders 1.2770 // 1.2885 / 1.3000 is still relevant. In fact, we are still waiting for some kind of confirmation regarding the change in the timeframes, from which the quote is still being fixed, and will lead to a further decline as part of the recovery process.
In terms of the emotional mood of market participants, we see a temporary lull, clearly confirmed by the volatility. At the same time, speculative interest continues to be high.
Detailing every minute of the time period, we see a sluggish fluctuation, where the quote just came out of the night stagnation.
As a result, traders continue to follow the recovery theory, having some volumes in short positions. Meanwhile, speculators are not fixated on recovery or on any course, so the tactics of working on local jumps are their priority.
Having the general picture of actions, it is possible to assume that fluctuations within the upper part of 1.2885 / 1.3000 are now the main prospect. This reflects the consolidation of the quote. If the theory is confirmed, we will see a resumption of downward interest, with the price fixing lower than 1.2870 / 1.2885, where the path to the main frame of 1.2770 will open. On the other hand, the theory will be revised if the price returns above 1.3050.
Based on the above information, we will output the following trading recommendations:
- With the prospect of a movement to 1.2980-1.3000, consider local buy positions from the value of 1.2960.
- Sell positions are already being held by traders towards the 1.2770 level. If you do not have positions, wait for a new movement, when the price fixes below 1.2870.
Indicator analysis
Analyzing the different sectors of timeframes (TF), we can see that due to the fluctuation of 1.2885 / 1.3000, the indicators of technical instruments relative to minute and hour intervals took a variable position [Buy / Sell]
Volatility for the week / Volatility Measurement: Month; Quarter year
The volatility measurement reflects the average daily fluctuation, based on the calculation for the Month / Quarter / Year.
(February 12 was based on the time of publication of the article)
The current volatility is 29 points, which is a low value. It is possible that if the consolidation process still persists, abnormal activity within the value of 74 pip will remain.
Key level
Resistance zones: 1,3000; 1,3170**; 1,3300**; 1,3600; 1,3850; 1,4000***; 1,4350**.
Support areas: 1,2900*; 1,2885*; 1,2770**; 1,2700*; 1,2620; 1,2580*; 1,2500**; 1,2350**; 1,2205(+/- 10p.)*; 1,2150**; 1,2000***; 1,1700; 1,1475**.
* Periodic level
** Range level
***Psychological level
**** The article is based on the principle of conducting a transaction, with daily adjustments
