The pound/dollar currency pair slows down movement in the area of 1.2510/1.2520 for the third time in a row, where the price rebounds on a natural basis, which led to the formation of an amplitude within the values of 1.2510/1.2570. Regarding the price movement, you can see a downward trend line that starts from June 10, but the brightest confirmations are available on July 9, 13 and 15, where the quote systematically returns to sales. It should be noted that the trend line crosses the range level 1.2620, which led to the expansion of its interaction boundaries.
Market dynamics, in turn, fell sharply relative to the daily average, and so on Friday, we saw activity of only 61 points, and this, by the way, is the lowest indicator in nine trading days. A decline in activity directly signals the readiness of market participants to accelerate and this is confirmed by the 1.2510/1.2570 amplitude, which reflects the accumulation of trading forces.
The news background on Friday did not include statistics on Fraternization, but the construction figures were published for the United States, which came out good. Construction of new houses in June grew by 17.3%, against 8.2%, and the number of building permits issued was slightly worse than forecast, but we still have an increase of 2.1% in June.
The market reaction was expressed in the local strengthening of the US dollar at the time of the publication of statistics.
In terms of the general information background, we have dreams of a bright future for Brexit, which Liam Fox, the candidate for the post of WTO Director General from Britain, outlined during a press conference.
So Liam Fox hopes that Brexit's issue will be resolved soon, and this will not only be a moment of a trade deal between the countries, but a signal of confidence in the economic growth after the coronavirus crisis.
"I hope, as I have always hoped, Britain will reach an open and liberal Brexit trade deal with the EU. As the global economy is hit by the pandemic, and according to the OECD forecast, global GDP in the first half of 2020 will fall by 13%, and unemployment may reach its highest since the Great Depression, in these conditions, reaching an agreement is positive not only because this is good for these two parties, but also because it is a sign of confidence for the global economy, a sign that there will be a recovery of the economy after the pandemic," said Liam Fox, speaking at the WTO headquarters in Geneva.
In theory, as always, everything is fine, but in practice everyone defends their position on Brexit and face-to-face meetings of the chief negotiators end before they begin. It is worth Recalling that this week's negotiations, which will end on Thursday at lunchtime, will also cover areas from energy to security cooperation. The final round of talks is scheduled for the week of August 17, but there were no plans after that.
Based on this, the pressure will continue to grow followed by volatility.
Today, in terms of the economic calendar, we do not have statistical data worthy of attention, therefore, special attention is paid to technical factors, as well as to the external information background.
From the point of view of a comprehensive analysis, we see that the quote, as before, oscillates between the variable boundaries 1.2510/1.2570, trying to break out of the framework, but so far only having a V-shaped formation (M30). Low activity is not a typical phenomenon for such a dynamic currency pair as pound/dollar, which means that a local surge in activity will come in the very near future and we are not talking about a jump in the price within the variable range of 1.2510/1.2570.
The burning forecast is that the accumulation process in the 1.2510/1.2570 borders accumulates trading forces, which may lead to a jump in speculation about the breakdown of a particular border. It is worth noting that based on the direction of the trend line, the main course has a downward slope, but local jumps may have the opposite direction.
Based on the above information, we will display trading recommendations:
- Consider sale deals below the level of 1.2555, with the prospect of a movement to 1.2510. The main impulse is considered after the price consolidates below 1.2500.
- Consider buy deals in case of price consolidation above 1.2575-1.2580, with the prospect of a movement to 1.2620.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments relative to minute and hourly intervals have a variable buy signal due to the movement of prices within the accumulation limits of 1.2510/1.2570. The daily timeframe, in turn, runs on a major upward trend, consistently signaling a buy.
Weekly volatility / Volatility measurement: Month; Quarter; Year
Measurement of volatility reflects the daily average fluctuation, calculated for the Month / Quarter / Year.
(July 20 was built taking into account the time of publication of the article)
The volatility of the current time is 61 points, which is 46% below the daily average. It can be assumed that in the event of a breakdown of the accumulation boundaries, acceleration will occur, which will lead to an increase in volatility.
Key levels
Resistance Zones: 1.2620; 1.2770 **; 1.2885 *; 1.3000; 1.3170 **; 1.3300 **; 1.3600; 1.3850; 1.4000 ***; 1.4350 **.
Support Zones: 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
