From the point of view of complex analysis, we see a sharp acceleration, where the quote locally flew to the level of 1.3068, and now let's talk about the details. After the breakdown of the clock component and decline to a variable level of 1.2885, the process of formation began, where the return to the psychological point of 1.3000 was extremely large. In the previous review, we warned you that fluctuations within the 1.3000 [+/- 50 pip] level are a perfectly normal process where you can even make money. The recommendation on local entry into long positions above the level of 1.000 with a prospect of 1.3050 worked with a profit. Is it worth it to make a noise that the theory of the downward move is being destroyed is still unknown. I think it's too early to panic, since there are still a lot of confirming signals of this theory. In our last articles, we repeatedly presented arguments from the technical and fundamental side, which confirmed the theory, but did not specify the terms. So, the theory is built on the medium-long term, where you should not expect quick changes or immediate jumps, since everything should happen sequentially. After that, we will see a recovery in the global downward trend. The first step in terms of the formation of our theory has already been taken, we broke a looped cycle along the psychological level of 1.3000, and now it does not seem as indestructible as before. The next step, which will give confidence to market participants, will occur at the time of fixing the price in the range of 1.2770 / 1.2885 / 1.3000. Confirmation of the theory will come at the time of the breakdown of the level of 1.2770 and fixing the price below it.
In terms of volatility, we see a looping slowdown of five trading days, which led to a regular acceleration, where the activity of the day was 125 points, which is 32% more than the average daily value.
Details of volatility: Thursday - 79 points; Friday - 79 points; Monday - 74 points; Tuesday - 74 points; Wednesday - 44 points; Thursday - 125 points. The average daily indicator, relative to the dynamics of volatility is 94 points [see table of volatility at the end of the article].
Detailing the past minute by minute, we see that the main turn occurred in the period 13: 45-14:30 [UTC+00 time at the trading terminal], where we observed the upward movement. The subsequent swing was in terms of a small pullback.
As discussed in the previous review, traders who adhere to strategic tactics have downward positions with a conservative volume per trade. In terms of speculative positions, there were local operations from 1.000 to 1.3050.
Considering the trading chart in general terms [the daily period], we see a medium-term upward trend, in the structure of which all the existing fluctuations occur. In turn, the global trend remains downward, in the structure of which the current medium-term trend is developing.
The news background of the past day contained inflation data in the United States, where growth was recorded from 2.3% to 2.5% with a forecast of 2.4%. The indicators are very strong in terms of medium-term consideration of the dollar, where we get significant support and insurance from a possible Fed rate cut.
In terms of general information background, we had a strong market reaction to personnel changes in the UK government. So, Prime Minister Boris Johnson fired four key cabinet ministers, but the highlight of the program was the dismissal of Finance Minister Sajid Javid, which was a surprise to everyone. According to rumors from the media, Sajid Javid refused Johnson to dismiss a number of closest advisers on the ministry, to which he received an answer in the form of his resignation. In his place came the former Goldman Sachs banker, Rishi Sunak, where the market reaction was local in the form of expectations that he would be able to get the right people with incentives in the form of cash injections that would be taken into account in the budget. The reverse side of the picture remained in the shadow; this action, in anticipation of the publication of the budget, casts doubt on the financial caution of the government, which is likely to not complied with and is spontaneous. Let me remind you that the budget was supposed to be published on March 11, but in view of such events it can be delayed as a hypothesis.
Today, in terms of the economic calendar, we have data on retail sales in the United States, where they expect a significant slowdown in growth from 5.8% to 4.9%. It is worth considering that the existing forecasts for retail sales do not play in favor of the dollar, but if we consider the recent report of the Ministry of Labor, we see that the forecasts can be changed for the better.
The upcoming trading week begins with a weekend in the United States, where Presidential Day is celebrated, which may affect trading volumes. In terms of the economic calendar, we have a lot of statistics, where inflation is expected in Britain, as well as the minutes of the Fed meeting.
The most interesting events displayed below --->
Monday February 17th
USA - Day off
Tuesday February 18
United Kingdom 9:30 Universal time - Applications for unemployment benefits (Jan): Prev 14.9 thousand .---> Forecast 22.6 thousand
Great Britain 9:30 Universal time - Unemployment Rate: Prev 3.8%
United Kingdom 9:30 Universal time - The average level of salary, including bonuses / excluding bonuses
Wednesday February 19th
Great Britain 9:30 Universal time - Inflation: Prev 1.3%
USA 13:30 Universal time - Dynamics of building permits (m / m) (Jan): Prev 1.420M ---> Forecast 1.450M
USA 13:30 Universal time - Started construction of houses (m / m) (Jan): Prev 1,608M ---> Forecast 1,390M
USA 13:30 Universal time - Producer Price Index (YoY) (Jan): Prev 1.3 ---> Forecast 1.4%
USA 19:00 Universal time - Protocol of the meeting of the US Federal Open Market Committee
Thursday, February 20
United Kingdom 9:30 Universal Time - Retail Sales (YoY) (Jan)
USA 13:30 Universal time - applications for unemployment benefits
Friday, February 21
Great Britain 9:30 Universal time - Preliminary index of business activity in the services sector from Markit
Further development
Analyzing the current trading chart, we see that the quote has moved into the reverse phase after a slight stagnation within the level of 1.3050, bringing us closer to the key coordinate. In fact, we still see the error in the fluctuations of [1,3000 +/- 50 pip], which we wrote about yesterday; thus, fixing is conditionally still being carried out, although it was broken during the information noise.
From the point of view of the emotional mood of market participants, we see a high coefficient of speculative positions, which gives increased interest in the existing fluctuations.
By detailing the time interval that we have per minute, we see night stagnation with an amplitude of just over 25 points, where a breakdown of its lower border of 1.3035 occurred during the European trading session.
In turn, traders continue to monitor the behavior of quotes, where the theory of decline is still relevant. At the same time, speculators are already in the process of impulse candles that occurred during the breakdown of the night oscillation.
Having a general picture of actions, it is possible to assume that a price return below 1.3000 will come soon, and a subsequent tact will come to it, aimed at an average level of 1.2885, which will reflect price fixing in the new range. It is worth considering that the current news background in the United States may exert local pressure if forecasts coincide, thereby returning the price a little later, at the beginning of next week.
- Local purchase positions were already considered in case of price fixing higher than 1.3065.
- Positions for sale are already being conducted by traders in the direction of the level of 1.2770, a conservative volume per transaction. Speculative positions are lower than 1.3201 with a prospect of 1.2980-1.2960.
Indicator analysis
Analyzing a different sector of timeframes (TF), we see that hour periods have changed their interest to ascending - local due to the recent surge. At the same time, medium-term plots are still holding a downward trend, signaling 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 14 was built taking into account the time of publication of the article)
The current time volatility is 44 points, which is still a low value in terms of dynamics. It is likely to assume that acceleration is possible against the background of the general market sentiment and a large number of speculative operations.
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
