From the point of view of complex analysis, you can see the gradual execution of the previously derived theory, where the quote managed to break through the control level, and now let’s talk about the details. Last trading week concentrated on itself short positions, during which the quote consistently overcame control values, eventually consolidating below the area of interaction of trading forces 1.2150 / 1.2180. This kind of step led to a number of consequences, where the 1.5-month flat 1.2150 (1.2250) // 1.2350 // 1.2620 ceased to play the main role, and the quote has clear signs of the recovery process.
It turns out that the theory of downward development, which has been proven for so long, has moved to the execution stage, which means that the downward trend is alive as never before. Based on the available data, it is possible to fix the recovery, by about 45% relative to the course of 03.20.20 – 04.14.20. Subsequent confirmation should occur after the breakdown of the psychological level of 1.2000, which will signal the entry into force of the recovery process and the development of half of the entire upward course. Let me remind you that the historical minimum is located at 1.1411 from March 20, the development theory assumes a step-wise move in this direction, where relative to the coordinate having a price, there are levels [steps]: 1.2000; 1.1850; 1.1660; 1.1450 (1.1411).
Analyzing the minute last Friday, you can see that the downward movement took place throughout the day, but the most remarkable jumps in activity occurred in the period 9:30-13:30, just on it, the level of 1.2150 was broken.
As discussed in a previous review, traders noticed a concentration of forces within the area of 1.2150/1.2180, where a combination of factors predicted a breakdown for which the main rate was.
Regarding the trading recommendation from Friday, we have regular profitable trades from short positions.
[We consider selling positions already lower than 1.2200, towards 1.2170. The main transaction will occur after the price consolidates below 1.2150, towards 1.2000.]
In terms of volatility, acceleration was recorded, but it was expected for a number of factors. So, a day before the jump in activity, a sharp slowdown was observed relative to the past six days, which is considered a signal of possible acceleration. The second sign of acceleration was the breakdown of the 1.2150 / 1.2180 trade force interaction area, which accumulated market participants.
Considering the trading chart in general terms [the daily period], you can see a sequential downward trend literally from the beginning of May. At the same time, market participants noticed the “Double Top” graphic pattern, the border of which was broken, signaling a downward interest.
The news background on Friday afternoon contained data on retail sales in the United States, the decline of which accelerated from -5.7% to -21.6%, and this, incidentally, is the lowest figure since the nineties. The depressing statistics for the states did not end there, as later data on mixed production came out, where the decline accelerated from -4.9% to -15.0%.
There was literally no reaction from the market, if we confine ourselves to the analysis of the GBP/USD currency pair.
In terms of the general information background, there is a wide flow of news, and so, let us begin to consider the promise of Prime Minister Boris Jonsan to return the country to pre-coronary life within two months. This statement was made during a video conference with members of parliament from the Conservative Party, but it is worth noting that the lifting of restrictive measures and a return to ordinary life will occur if the country meets the criteria established to stop the virus.
In an authoring article published on Sunday by The Sunday Times, Prime Minister Boris Johnson has pledged £ 93 million to set up a vaccine center in order to speed up the process. It is worth noting that the new center should open in the summer of 2021, but formally, this cent is already in plan since 2019, where it was initially allocated 76 million pounds, then 38 million pounds, now another 93 million pounds are allocated to accelerate the process.
Let’s go further and talk about the Bank of England. It was recently stated during Andrew Bailey’s speech that a move to a negative rate would be a very big step and would require extensive communications, and the regulator is not ready for this yet. Now, the Bank of England’s chief economist, Andy Haldane, says that a negative rate is a way to save the country’s economy, and this tool should be considered in the work.
We conclude the section on information background with news from the Brexit fields. So, the EU’s chief negotiator for Brexit, Michel Barnier, said that there was no progress based on the results of the week-long negotiations between Brussels and London, and Britain refused to hold a real discussion on equal terms.
Barnier also noted that he was disappointed with the lack of ambition on the part of the United Kingdom.
“I want to be honest with you, we are also disappointed with the lack of ambition on the part of the UK. We are not going to trade our values for the benefit of the British economy. The EU does not intend to enter into a new trade deal with London without equal conditions for competition or a comprehensive fisheries agreement,” said Michel Barnier at a press conference following a week-long negotiations between Brussels and London.
Today, in terms of the economic calendar, we do not have statistics on Britain and the United States that are worth paying attention to, but today the Treasury of the Kingdom is due to report to Parliament on global economic problems.
By analyzing the current trading chart, we can see the opening of a new trading week with a small downward gap, where it was closed according to the results of the Asian session. In fact, the stabilization process of quotes is visible at new levels, where short positions are still felt, otherwise the return of the price would not be long in coming. Regarding the theory of development, market participants expect price consolidation below the psychological market in order to proceed to the next stages of recovery.
In terms of the emotional mood of the market, a little caution is visible, perhaps amid the existing mood change, but this phenomenon is temporary, so any stop will be covered by subsequent acceleration.
It can be assumed that the quote is trying to pullback to the previously passed level of 1.2150, but activity is low, so do not rule out a further decline towards the psychological level of 1.2000.
Based on the above information, we derive trading recommendations:
– We consider buying positions in terms of local transactions, higher than 1.2125, in the direction of 1.2150 – 1.2180.
– We consider selling positions as the main transactions in the direction of 1.2000. If we do not have deals, then the entry is lower than 1.2070. Subsequent transactions are made after the price consolidates below 1.2000.
Analyzing a different sector of time frames (TF), we see that technical instruments on hourly and daily periods continue to indicate a sell signal, which is confirmed by the general interest of market participants.
Volatility per week / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, calculated for the Month / Quarter / Year.
(May 18 was built taking into account the time of publication of the article)
The current time volatility is 50 points, which is considered a low indicator relative to the average daily value. It can be assumed that activity will still increase in the event of the resumption of a previously specified measure.
Resistance zones: 1.2150 **; 1.2250; 1.2350 **; 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: 1.2000 *** (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
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.