The GBP/USD currency pair continued a rather sluggish fall on Monday. However, recall that the pair's volatility remains very high, which is clearly seen in the illustration below. The pair has averaged at least 150 points a day in the last two weeks and often much more. Therefore, the sluggish movement on the 4-hour TF is not so sluggish. The main thing is that the pair has fixed below the moving average line, and both linear regression channels did not even have time to react to the last round of growth of the British currency. Thus, all indicators are again directed downwards, and the pound's recovery can only lie in the plane of the Kijun-sen line on the 24-hour TF, below which the price can gain a foothold from day to day. If this happens, the probability of a new fall in the pair will increase significantly.
We have already said that the last round of the downward movement of the pair is very similar to the end of the entire downward trend. It is with such "injections" that global trends usually end. But this time, it may be different. The problem remains the same – complex geopolitics, and aggressive rate hikes in the US do not allow risky assets and currencies to show growth. After all, not only the euro and the pound are falling. The US stock market, the European market, the cryptocurrency market, and many other currencies are falling. Therefore, if it were not about the "foundation," then some markets could do without falling.
Geopolitics continues to add fuel to the fire. On Monday, massive missile strikes were launched in Ukraine, resulting in several cities being left without electricity and water at once. Perhaps this was the response to the sabotage on the Crimean Bridge a few days earlier. The Kremlin's top officials openly accused Kyiv of this sabotage and promised a response. Now Kyiv promises a "response," so there is no question of any de-escalation of the conflict now. Several international meetings will be held in the near future at which a decision may be made on introducing new sanctions against Russia and new arms supplies for Ukraine. The world continues to move confidently in the direction of a world war.
Scotland criticizes Liz Truss.
According to tradition, the UK is full of problems, which can also pressure the pound. Many polls and social studies have shown that Liz Truss's first month as prime minister of the country turned out to be one of the most disastrous and unsuccessful of all premiers. In principle, Truss' initiative to lower some taxes and refuse to raise several other taxes faced massive criticism in Parliament and even in the Conservative Party, which chose Truss as its leader. In Scotland, which has been officially declaring its desire to part with the United Kingdom for several years, "anti-British sentiments" are maturing because of London's policy. Scotland's First Minister, Nicola Sturgeon, said that Truss' first month as prime minister turned out to be "disastrous." Sturgeon called the economic policy that Truss' cabinet tried to implement a "disaster."
She once again reminded us that "independence is a responsibility for your own decisions, not for those that were imposed," hinting that the Scottish people did not vote to leave the European Union. Thus, Sturgeon once again made it clear that she fundamentally disagrees with London's policy and will continue to promote the idea of a new referendum on Scottish independence. Recall that, according to the latest information, the referendum may occur at the end of 2023. However, this will not be an official referendum but an advisory one. In other words, it will be a nationwide opinion poll, which should show what percentage of Scots support secession from the Kingdom. If the results are positive, Edinburgh will continue to seek official permission from London to hold a real referendum, thus having a trump card – the people's will. If he does not receive it, it is possible to appeal to the Supreme Court to recognize Westminster's refusal to grant the right to a referendum as illegitimate. One way or another, Scotland continues to look towards a return to the EU and separation from the UK.
The average volatility of the GBP/USD pair over the last five trading days is 198 points. For the pound/dollar pair, this value is "very high." On Tuesday, October 11, thus, we expect movement inside the channel, limited by the levels of 1.0841 and 1.1235. A reversal of the Heiken Ashi indicator upwards will signal a round of upward correction.
Nearest support levels:
S1 – 1.0986
S2 – 1.0742
S3 – 1.0498
Nearest resistance levels:
R1 – 1.1230
R2 – 1.1475
R3 – 1.1719
Trading Recommendations:
The GBP/USD pair continues its downward movement in the 4-hour timeframe. Therefore, at the moment, you should stay in sell orders with targets of 1.0986 and 1.0841 until the Heiken Ashi indicator turns up. Buy orders should be opened when the price is fixed above the moving average line with a target of 1.1475.
Explanations of the illustrations:
Linear regression channels help determine the current trend. The trend is strong if both are directed in the same direction.
The moving average line (settings 20.0, smoothed) identifies the short-term trend and the direction in which you should trade now.
Murray levels are target levels for movements and corrections.
Based on current volatility indicators, volatility levels (red lines) are the likely price channel in which the pair will spend the next day.
The CCI indicator – its entry into the oversold area (below-250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
