4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - up.
CCI: 244.1502
The British pound continues its strong upward movement on May 1 and has worked out the Murray level of "7/8". In the article on the EUR / USD pair, we have already said that there were no good reasons for the strong fall of the US dollar yesterday. Two far from the strongest reports, one of which was not a failure, and the second did not cause a strong reaction of traders ever, could not provoke a strong growth of the pound/dollar pair. However, it doesn't matter now. It is important that a correction may start tomorrow, which would be the logical end of the week. If the strong growth of the British currency continues tomorrow, then it will be appropriate to talk about a new wave of panic in the currency market.
Since the flow of news and economic data from the UK is still reduced to zero, and the pound/dollar pair continues to move along the same trajectory that it understands, we suggest focusing on the urgent problems of the US. Recently, attention has shifted from the "coronavirus", which continues to set records for morbidity and mortality in the United States, to future presidential elections. According to the latest information, the political ratings of Joe Biden, a Democrat and the main opponent of Donald Trump in the upcoming elections, are much higher. And Trump himself is more and more often criticized for frankly absurd comments on the topic of "coronavirus", which change dramatically every week, as well as for the failure of proper preparation for the epidemic and the fight against the new virus. As soon as Trump realized that he could be extreme in this situation since he is the head of the state with the highest number of deaths and diseases, he immediately began to look for the culprits. At the moment, this list includes the WHO, China, and the doctors who introduced him at the very beginning of the epidemic. Also, Trump said the following in response to a direct question about Biden's political ratings: "I don't believe in polls. I believe that American citizens are smart. I don't think they'll put an incompetent person in here. I believe that he (Joe Biden) has been incompetent for 30 years. Everything he ever did was bad. His foreign policy was a disaster." As always, no facts or evidence or grounds, just Trump's personal opinion. We also previously reported that the cancellation of all rallies in support of Donald Trump in the many American states clearly does not benefit the political ratings of the current President. This is also understood by Trump himself, who, despite the raging epidemic, is going to visit Arizona and Ohio next week. Also, the leader of the United States expresses the hope that his meetings will continue to be for 25 thousand people, and "people will not sit at a distance of six chairs from each other." It's scary to even imagine the scale of the pandemic in the United States if Trump starts riding with rallies across the country.
At the same time, political analysts believe that Donald Trump has also significantly damaged his political authority due to skirmishes with the governors of many states. Especially those that are most affected by the "coronavirus". Especially those that are controlled by Democrats. Various opinion polls show the loss of Trump's leadership in four key states - Florida, Pennsylvania, Michigan, and Wisconsin, where previously it was Trump who won (in 2016). Now in these states, Joe Biden leads. Most importantly, there is a change in preferences among voters aged 55 and over across the country. And here there are two important factors. First, it is this age group that is most susceptible to the COVID-2019 virus. Second, this age group is the most active in elections. Thus, older Americans are simply dissatisfied with the White House's fight against the "Chinese infection" and its desire, instead of extending quarantine measures to open the country's economic borders, which threatens new outbreaks of the pandemic and new deaths, primarily among the elderly. More and more Americans believe that the Democratic candidate could have handled the pandemic better and generally thinks more about people.
It is also noted that back in March, Donald Trump's political ratings were much higher. So high that the leader of the United States could feel relatively calm before the upcoming elections. However, in the future, a series of mistakes, omissions, conflicts, contradictory statements, the rush to open economic borders, possibly paid rallies in support of "resuming normal life" (in which an extremely small number of people participated) led to the fact that the majority of American voters already seriously doubt the feasibility of Trump's re-election. As practice shows, when Trump is fighting in the international arena (military conflicts in the Middle East, trade wars), Americans support him. But when it comes to their own health and life/death, very few are ready to stand for Trump's mountain.
On the last trading day of the week in the UK, the publication of the index of business activity in the manufacturing sector for April is scheduled, which is likely to decrease from 47.8 to 36.4 points and is unlikely to have any impact on the movement of the pound/dollar currency pair. In the United States, business activity indices are also scheduled to be published today. The ISM index, which is considered more significant than Markit, will attract the most attention. However, the ISM index in the manufacturing sector is likely to decline as well as Markit. In general, Friday will be quite boring in terms of macroeconomic information. We are waiting for traders to calm down after a fairly active Thursday and a drop in volatility. Moreover, the reasons for yesterday's growth of the euro and the pound remain open. If there are fewer questions about the euro, then why the pound grew in the second half of the day is a serious question. We believe that this strengthening of the British currency was somewhat unjustified, which means that it can be played back in the opposite direction on the last trading day of the week. Moreover, the pound/dollar pair yesterday perfectly worked out the previous local maximum of 1.2647 and failed to go above it. Therefore, we can obtain the similarity of the pattern "double top", followed by a drop in prices.
The average volatility of the GBP/USD pair has increased again due to yesterday and is now 120 points. For the pound, this is not much, the main thing is not to start a new trend of increasing volatility, which may mean a new panic in the market. On Friday, May 1, we expect movement within the channel, limited by the levels of 1.2473 and 1.2713. Turning the Heiken Ashi indicator down will indicate the beginning of a corrective movement.
Nearest support levels:
S1 – 1.2573
S2 – 1.2512
S3 – 1.2451
Nearest resistance levels:
R1 – 1.2634
R2 – 1.2695
R3 – 1.2756
Trading recommendations:
The GBP/USD pair continues its strong upward movement on the 4-hour timeframe. Thus, traders are advised to stay in buying the pound with targets of 1.2634 and 1.2695, until the Heiken Ashi indicator turns down. It is recommended to sell British currency no earlier than fixing the price below the moving average line with the first target Murray level of "3/8"-1.2390.
