From the point of view of complex analysis, we see a free fall with the update of historical lows, and now, let's talk about the details. Fear is faster than a virus, which is how you can label everything that happens when the markets go down. For the first time since the fall of last year, the pound sterling managed to update the lows, where it not only crossed the level of 1.1957, but received a free fall. During the day, the quote flew over 600 points, where market participants saw such low values that they had not seen for more than thirty years. In fact, there was a fatal response of the last stops at a level lower than 1.1957, where nothing stood before the price and it flew freely down. If we look not only at the past day, but at the big picture, we will see that the quote showed such strong activity in seven trading days that it managed to fly over 1600 points, and this is the scale of a full-fledged trend. Now, we understand the scale of the panic.
Concerning the theory of downward development, so much profit was made that I didn't even expect that we would be able to go down so quickly and such low limits. In this development, who has been working since the beginning of February, I would advise you not to be greedy, to fix proportionately your income. If we are considering further development, then it is worth focusing on the general panic and possible consequences, since so far, we only have dark stories that can continue to drive the pound sterling to the bottom. Do not forget the words of the former head of the Bank of England, Mark Carney, who considered the ambiguity of the fate of the British economy in the light of exit from the EU, predicting parity of 1.0000, and now the risk of coronavirus consequences has also increased, which will bring a lot of problems to the world economy and, in particular, Great Britain.
In terms of volatility, we see MEGA-high activity, which was last recorded at the time of the announcement of the results of the referendum in Britain Brexit [06.24.16]. The daily average this time was exceeded by 412%, and the candle [D1] had an almost solid shape, which confirms the inertia. Let me remind you that the acceleration in the market has been running for almost a month.
Details of volatility: Monday - 110 points; Tuesday - 102 points; Wednesday - 102 points; Thursday - 107 points; Friday - 103 points; Monday - 165 points; Tuesday - 245 points; Wednesday - 172 points; Thursday - 358 points; Friday - 359 points; Monday - 144 points; Tuesday - 271 points; Wednesday - 676 points. The average daily indicator, relative to the dynamics of volatility is 132 points [see table of volatility at the end of the article].
Detailing the day by minute, we see that the downward move was set before the Europeans entered the market, but the main round of inertia occurred in the breakdown of the minimum on September 3, 2019 [1,1957]. The subsequent downward movement continued up to the level of 1.1452, where the market led so strongly at 15:30 UTC+00, that is, the quote managed to fly as many as 299 points in 30 minutes.
As discussed in a previous review, traders developed below, where they had a regrouping of trading forces in the region of 1.2000. The subsequent gulf in short positions occurred after the breakdown of the low of 1.1957, where everyone received a very solid profit in the end.
Looking at the trading chart in general terms [the daily period], we see that the global downward trend has updated historical lows, and the pound has lost more than 45% against the dollar over more than twelve years.
The news background of the past day contained macroeconomic data on the construction sector of the United States, where the number of building permits issued decreased in February by 5.5%, and the number of construction projects started fell by 1.5%. There was no market reaction to the statistical flow, as external background and panic prevail in the market.
In terms of the general information background, we have a panic, and the coronavirus is spreading around the world faster than expected. In Britain at 5 am UTC+00 on 03/19/20, 2642 cases of infection were recorded, an increase of 682 per day, and there is a peak of panic in neighboring Europe, where the kingdom is trying to escape from. Against this background, the European Parliament advocates the extension of the Brexit transition period due to the raging coronavirus, where it is now a priority to solve the existing pandemic problems
"From the European side, we are ready to extend the transition phase to a maximum until the end of 2022. To do this, the United Kingdom should send an appropriate request," said David McAllister, Plenipotentiary of the European Parliament for Brexit.
At the moment, the second phase of negotiations between England and Brussels is temporarily canceled in terms of personal meetings, and so, communication is carried out through online conferences.
In turn, the Bank of England on Wednesday urgently issued loans to British banks in the amount of $ 15 billion, the last time lending of such volume took place in the 2008 crisis.
According to the former head of the Bank of England, Mark Carney, the current situation is different from the one that was 10 years ago. In recent years, banks have been building up capital reserves, so they should be part of the solution to the economic crisis this time, and not its cause.
Today, in terms of the economic calendar, we have data on applications for unemployment benefits in the United States, where growth of 14 thousand is expected [Primary + 8tys .; repeated + 6 thousand.]. It is worth considering that the panic mood and the pressure of the external background are still preserved in the market.
Further development
Analyzing the current trading chart, we see a slowdown within 1.1452 / 1.1661, where, from the point of view of common sense, a technical correction is necessary, but now, technical analysis, and even fundamental analysis, does not particularly show working capacity, and inertia plays the role of a locomotive against the background of panic Thus, in the case of updating, having a minimum does not exclude that the panic decline will resume.
From the point of view of the emotional mood of market participants, we see a distinct panic, where speculators are operating. Due to the preserving pressure on the external background, the market will continue to show high activity.
By detailing the per minute portion of time, we see a conditional lateral movement that originated yesterday and remains in the market for more than 50 hours. It is worth considering that even though the market has a local sidewall, its width is 190 points.
In turn, traders actively fix the profit received due to yesterday's decline, where the current flat helps with this. In turn, new short positions will be lowered after fixing the price than they continue to work on a decline, where they already have a fix, which made it possible 1.1450.
Given the general picture of actions, it can be assumed that movement within the 1.1452 / 1.1661 range is still possible, but if prices are fixed lower than 1.1450, the downward development will resume. In fact, the panic mood plays an integral role in the theory of the downward movement and due to which, the rally takes place.
Based on the above information, we derive trading recommendations:
- Buy positions are considered higher than 1.1525, with the prospect of a move to 1.1600 / 1.1650.
- Sell positions are considered in case of price fixing lower than 1.1450, with the prospect of a move to 1.1350-1.1300, then depending on the scale of inertia and panic mood.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that the indicators of technical instruments signal sales due to a strong downward move. In fact, the indicators were influenced by the background, where the indicators automatically turned around.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(March 19 was built taking into account the time of publication of the article)
The current time volatility is 188 points, which already exceeds the average daily indicator by 42%. As you understand, speculative activity and pressure of the external background will continue to escalate panic and, as a fact, high volatility.
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 1.1452; 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
