From the point of view of a comprehensive analysis, we see a partial recovery process after updating the lows, but there are no fundamental changes. Now, let's talk about the details. Last week was one of the most active in recent years, where more than 900 points were covered, but this is not the most important, since the main event was the update of the lows. At the same time, we have not recorded such bottoms for decades, and this leads to panic among investors in Britain. The minimum mark of the week was the value of 1.1411, where the quote slowed down and formed a partial recovery. In fact, we do not see dramatic changes after a rebound from the minimum, and if we turn our attention to March 18, we will notice that this is not the first recovery, but most importantly not the first probing of the lower classes. That is, the quote faced an interesting phenomenon, where the external background does not allow it to grow, but it does not go down further farther due to the high pressure of historical lows. Thus, it turns out that the borders of a wide flat loom.
Regarding the theory of downward development, we see that the key coordinates have already been reached and if it were not for the external background, then the transition to an upward recovery would have already come, but due to difficult circumstances in the world, further decline is not ruled out. With this background, special attention is paid to having a slowdown, where in order to resume the downward mood, the quote needs to concentrate on the range of 1.1450 / 1.1650. An alternative scenario will be considered with a price concentration in the range of 1.1850 // 1.2000 // 1.2150.
In terms of volatility, we see the second mega activity for the week, which exceeded the daily average by 243%. The previous surge was recorded on March 18 - 676 points. Regarding the general dynamics, an acceleration has been recorded as early as a month, which does not remain without attention among speculators.
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. The average daily indicator, relative to the dynamics of volatility is 152 points [see table of volatility at the end of the article].
Detailing every minute of Friday, we see that the day began with an update of the low, where the recovery process started almost immediately, which led us to the area of 1.1850 [maximum point 1.1933]. Then with the entry into the American market, the reverse process took place, returning us below the level of 1.1660.
As discussed in the previous review, traders worked locally in long positions, where profit taking occurred in the region of 1.1850. Sales positions began to be considered against the background of a possible development of the level of 1.1850, already below the level of 1.1790.
Considering the trading chart in general terms [the daily period], we see a solid inertial movement, where the quote passed more than 1600 points without significant pullbacks for eight trading days. In fact, having stagnation is the first adjustment in a given time span.
Friday's news background did not have significant statistics on Britain and the United States, thereby focusing on the external background.
The information background continues to be under the strongest pressure of the virus raging in the world, where 338,698 have already been infected, and only 5,741 in Britain. Moreover, the coronavirus conditionally paralyzed the negotiations between Britain and Brussels on trade relations after Brexit, since Michel Barnier, the EU negotiator who had a positive result found for COVID-19. After that, information appeared that the negotiator from the United Kingdom, David Frost, was also self-isolated in connection with the appearance of coronavirus symptoms in him.
In turn, British Prime Minister Boris Johnson does not intend to extend the transition period after Brexit, but the topic of extension is mentioned among the British and EU governments more and more often.
With respect to Britain's actions to limit the spread of the virus, French President Emmanuel Macron spoke out that he had to threaten England in order to get Johnson to move. However, the closure of pubs and clubs in the United Kingdom did not stop citizens who continued to raid parks and coastal cities. To which the government intends to expeditiously pass a bill on the state of emergency through parliament, for tougher measures to regulate the situation.
Today, in terms of the economic calendar, we do not have important macroeconomic data for Britain and the United States, but even if the statistical data were there, they would still be on the second background after the COVID-19 virus.
Further development
Analyzing the current trading chart, we see price fluctuations within the level of 1.1660, where an attempt is made to resume the founding towards the base. In fact, the interaction of the levels of 1.1450 / 1.1660 is considered at this time, which leads to the development of a downward movement, due to the external background.
From the point of view of the emotional mood of market participants, we see that activity is still high and this is due to the panic mood caused by the fall of the financial market, as well as the COVID-19 virus.
By detailing the available time interval, we see that the start of the daily candle was in a local upward trend, but when the Europeans entered the market, the downward trend resumed.
In turn, traders are considering descending positions in the direction of 1.1532-1.1450.
Having a general picture of actions, it can be assumed that the downward development is still relevant, where the first point of interaction is in the region of 1.1532, which reflects the minimum of the current day. The subsequent coordinates are in the region of 1.1411 / 1.1450, which reflects the basis of the historical minimum.
Based on the above information, we derive trading recommendations:
- We consider buying positions in case of price fixing higher than 1.1660 and a yield higher than 1.1713. The prospect of running in the direction of 1.1850.
- We consider selling positions in the direction of 1.1532. The next movement will be forecasted after reaching the first value.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments continue to signal sales, due to the preservation of a downward trend in the markets.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(March 23 was built taking into account the time of publication of the article)
The current time volatility is 178 points, which already exceeds the average daily indicator by 17%. As you understand, the panic mood has not disappeared, thereby the market activity will continue to grow.
Key levels
Resistance Zones: 1.1660; 1.1850; 1.2000 *** (1.1957); 1.2150 **; 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 1.1450 (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
