From the point of view of complex analysis, we see a step-by-step process where the concentration of trading forces has reached the level of 1.2500, and now let's talk about the details. So the trading week came to an end, during which the quote managed to reach the level of 1.2620, having the whole structure of the upward movement of April 7. After that, the market interest turned into a bearish, was in a step-by-step course, with a minimum value of 1.2407 [16.04.20], but still maintaining a concentration at 1.2500. In fact, with this deviation, it is still difficult to say that we have a full recovery of the downward movement, since having movement is not enough for such high-profile statements.
When should we consider resuming the downward movement and what should be done on the market now?
Let's start with the first question regarding the resumption of the course, and so, considering the oscillation, we see only the edge. The fact that the quote has started a downward movement is hard to call even a correction because we consider the tact of the upward movement not as 04/07/20-14.04.20, but the general inertia of 03.20.20-14.04.20. It turns out that at this time of recovery from the total move is only 19%, and this is an insignificant share. In order to get at least some but integral signal of recovery, the quote needs to consolidate below the level of 1.2150.
Now that we understand where to talk about recovery, how should we trade now? This is the second question. Due to the fact that there is still no clear signal about the resumption of the downward movement, and the quote is conditionally at the peak of the upward movement, we should keep to the main movement. The strategy is this, we know the current direction, thereby we will work on it in case of updating the maximum of 1.2646 (1.2650). At the same time, local positions are still relevant, and directions are not as important to them as local fluctuations.
Analyzing the past day in detail, we see a clear concentration of trading forces at 1.2500, where quote rules for the longest time. The main jump occurred at a time period of 14:00 - 16:15 UTC+00, where a round of short positions was recorded and a decline to the value of 1.2407. Subsequent movement until the close of the daylight candle was expressed in reverse.
As discussed in the previous review, traders analyzed the fluctuation within 1.2455 / 1.2515, for acceleration after the breakdown of stagnation.
In terms of volatility, we see a slowdown of 30% relative to the average daily indicator, but it is worth considering that for the dynamics of the pound, a value above 95 is considered the norm.
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; Monday - 267 points; Tuesday - 296 points; Wednesday - 333 points; Thursday - 452 points; Friday - 352 points; Monday - 148 points; Tuesday - 227 points; Wednesday - 108 points; Thursday - 126 points; Friday - 198 points; Monday - 116 points; Tuesday - 217 points; Wednesday - 131 points; Thursday - 122 points; Friday - 42 points; Monday - 87 points; Tuesday - 146 points; Wednesday - 193 points; Thursday - 119 points. The average daily indicator, relative to the dynamics of volatility is 169 points [see table of volatility at the end of the article].
Considering the trading chart in general terms [the daily period], we see an upward inertial move with a scale of more than 1200 points, but with this fluctuation, the quote was not able to develop the initial inertia on 10.03.20-19.03.20.
The news background of the past day contained data on the labor market in the United States, where they published applications for unemployment benefits. So, in some ways, they came out better than predicted, but in terms of common sense, we have gloomy, initial applications of 5,245,000, repeated 11,976,000.
In terms of the general information background, we have an official confirmation regarding the extension of quarantine measures in Britain for another three weeks.
"The government has decided that the current measures should be effective for at least another three weeks. A condition for the gradual removal of restrictions should be a daily decrease in the number of new cases of COVID-19 infection and deaths, as well as a reduction in the rate of spread of coronavirus to a controlled level," said British Foreign Minister Dominic Raab at a press conference on COVID-19
In turn, Bank of England spokesman Silvana Tenreyro said in a recent statement that the United Kingdom will be hit hard by the economy due to blockages to slow the spread of coronavirus, and the Bank of England will be able to limit only a few of the consequences.
"The data that we have so far suggest that a drop in total spending is already taking place, and it will be extremely large. This is partly done specifically to preserve public health and long-term prosperity, governments around the world have temporarily closed certain sectors of the economy and limited consumption and production, "said Silvana Tenreiro
Finally, here's a few words about the recent rumors about a possible delay in the transitional period for Brexit. An official representative of the British government said that England would refuse to extend the Brexit transition period, even if the EU asks for a postponement.
In fact, we have another attempt at blackmail by Britain, where the message is this: make concessions or we will leave you without any agreement.
Today, in terms of the economic calendar, we have no worthwhile statistics on the UK and the United States.
The upcoming trading week in terms of the economic calendar contains data on Britain regarding unemployment, retail, and inflation, which are worth paying attention to. In turn, the external background will continue to excite speculators and escalate fear on investors.
The most interesting events displayed below --->
Tuesday, April 21
United Kingdom 06:00 Universal time - Unemployment Rate (Feb)
United Kingdom 06:00 Universal time - Applications for unemployment benefits (Mar)
USA 14:00 Universal time - Sales in the secondary housing market (Mar)
Wednesday, April 22
Great Britain 06:00 Universal time - Inflation
Thursday, April 23
Great Britain 06:00 Universal time - Retail sales
USA 12:30 Universal time - Applications for unemployment benefits
USA 13:45 Universal time - PMI Markit Index in the manufacturing sector (April) PRELIMINARY
USA 16:45 Universal time - Markit services business activity index (Apr) PRELIMINARY
Friday April 24th
USA 12:30 Universal time - Orders for durable goods (Mar)
Further development
Analyzing the current trading chart, we see that the quote returned to the level of 1.2500 during the Pacific and Asian sessions, but it actively changed the mood at the start of the European session, where there were downward impulses. In fact, work on local operations continues, where special attention is removed from the minimum of the past day - 1.2407, since in case of breakdown, the movement towards the level of 1.2350 will be a very likely result. At the same time, for alternative plots, the price needs to consolidate higher than 1.2530 in terms of local positions. In this case, a move towards 1.2565-1.2620 will be possible.
In terms of the emotional mood of market participants, we see that at the start of Europeans, speculators returned to the market.
Based on the above information, we derive trading recommendations:
- We consider buying positions higher than 1.2530, with the prospect of a movement to 1.2565 - 1.2620. The main movement is considered higher than 1.2650.
- We consider selling positions lower than 1.2400, with the prospect of a movement to 1.2350. The further move is considered after consolidating the price lower than 1.2340, with the prospect of a decline to 1.2285-1.2150.
Indicator analysis
Analyzing a different sector of time frames (TF), we see that the indicators of technical instruments relative to the minute and hour periods reflect a local downward movement, signaling a sale, while daily periods focus on the main direction, giving us a buy signal.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for Month / Quarter / Year.
(April 17 was built taking into account the time of publication of the article)
The volatility of the current time is 96 points, which is another 43% lower than the daily average. It is worth recalling that an activity index of 95 points is considered the norm for the pound, but with the current pressure, a further increase in volatility is still possible.
Key levels
Resistance Zones: 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: 1.2350 **; 1.2280 (1.2240); 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
**** The article is built on the principle of conducting a transaction, with daily adjustment
