From the point of view of a comprehensive analysis, we see the price movement within the established framework, where the concentration of trading forces reached its destination, and now, let's discuss the details. After changing the clock component, the quote declined into the scope of the earlier fluctuation 1.2770 // 1.2885 // 1.3000, where the amplitude between the middle level and the upper border was chosen due to fixing. Thus, we were ready for this development on Monday [February 10], predicting this kind of oscillation, since changing the clock component is not an easy task and we need an initial platform.
The first round was obtained, that is how many traders reason, considering the oscillation between the two coordinates [1.2885 // 1.3000]. In fact, everyone is preparing for more significant changes than the breakdown of the psychological level of 1.3000. In theory, there is a decline to the border of 1.2770, as a minimal prospect, in an ideal plot, restoration is considered relative to the medium-term upward trend. We discussed this development theory in a previous review where the global trend was taken as the basis and where downward interest is invariably maintained. At the same time, the fundamental component has a considerable number of signals that confirm the theory of a downtrend. The most significant factor is the decrease in the interest rate, which will soon move off the ground, but we also have a long process of economic transition after Brexit, which will not have the best effect on the economy, which, as a fact, will affect the English currency.
An interesting point is that, we see a similar situation as we analyze the EUR/USD currency pair. The downward trend has been and remains on the market, and thus, there is a positive correlation between trading instruments. For a general understanding, I advise you to read my previous article on the euro.
In terms of volatility, we see a slowdown, where at first we encountered an anomaly in the form of the same indicators, and then a sharp decline in activity to 44 points. In fact, we have confirmation of fixing quotes in a new phase, where the process is not so fast, but changing cycles is not an easy task.
Details of volatility: 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; Wednesday - 44 points. The average daily indicator relative to the dynamics of volatility is 92 points [see table of volatility at the end of the article].
Detailing the past minute by minute, we see a local rapprochement with the level of 1.3000, where the price did not reach the control value of some 10 points. The subsequent fluctuation was in terms of developing, returning the quote almost to the opening point. Moreover, activity was low and almost no local bursts were noticed.
As discussed in the previous review, traders adhere to strategic positions for sale, where there are still no large volumes, since everything is just beginning and there is a risk of failure of the recovery theory. Speculators, in turn, continue to work at local races, where the past day was relatively calm compared to the days earlier.
Considering the trading chart in general terms [the daily period], we see that there are still a considerable number of points before the recovery status. At the same time, the quote is still concentrated within the area of the previous measure.
The news background of the past day did not have statistical data for Great Britain and the United States, thereby emphasizing the technical part.
In terms of the general informational background, we see continued noise regarding the transitional period of Brexit, where the parties, even before the start of negotiations, tighten their positions, which leads to a wave of fear among investors. This factor exerts both direct and indirect pressure on the pound sterling, but it is likely that the situation will become even worse from the moment the negotiation process begins.
Today, in terms of the economic calendar, we have data on inflation in the United States, which is projected to increase from 2.3% to 2.4%. In fact, this will be another reason for the Fed not to lower the rate. If the expectations coincide, we will receive a signal to strengthen the dollar.
Further development
Analyzing the current trading chart, we see that the quote continues to concentrate within the level of 1.3000, forming an accumulation. In fact, we still have a signal of a possible future recovery, since there has already been a fracture of ticks, as well as local lows. Thereby, we need to consolidate and a new round of short positions. However, do not unnecessarily panic if the quote moves within the level of 1.3000 [+/- 50 pip], since this is the process of becoming.
From the point of view of the emotional mood of market participants, we are restrained, but it also reflects readiness for future actions.
By detailing the time segment that we have every minute, we see that there was a local surge in activity at the start of the European trading session, which returned the quote to the area of last day's maximum.
In turn, traders continue to follow the theory of the downward movement, where the behavior of quotes is carefully analyzed. Speculators, in turn, work at the races, which has already brought a small income.
With a total picture of action suggests that the variance of the level of 1.3000 continues, where in case of a small change in the interests of trade, possibly vone inflation data, can occur round of short covering. The first goal is to return prices to the mid-range area of 1.2885, after which we follow the fixation points, then the path to 1.2770.
Based on the above information, we derive trading recommendations:
- Local buy positions were already considered in case of fixing a price higher than 1.3000, where the local move is in the direction of 1.3050.
- Positions for sale are already being conducted by traders in the direction of the level of 1.2770, a conservative volume per transaction. If we do not have positions, it makes sense to wait for a new move with price fixing lower than 1.2870.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that there is a variable upward interest in the minute and hour sections due to the fixing process. On the other hand, the medium-term outlook is unchanged, which signals sales.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(February 13 was built taking into account the time of publication of the article)
The volatility of the current time is 39 points, which is a low value, in comparison with the past day there is a characteristic acceleration. It is likely to assume that if the fixation process is completed, we can see the acceleration within the daily average.
Key levels
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 built on the principle of conducting a transaction, with daily adjustment
