4-hour timeframe
Technical details:
Higher linear regression channel: direction - sideways.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - up.
CCI: 119.6388
The GBP/USD currency pair continues to move in a strange way on February 17. Formally, traders now have an upward trend at their disposal, since the price has fixed above the moving average line. However, over the past few months, the pair's quotes have already been fixed five times above the moving average, each time the upward trend has not started. At the same time, the downward trend cannot continue, which is much more logical from a fundamental point of view. Macroeconomic statistics from the UK are either slowing down or standing still (at best), so traders still have no reason to buy the pound for the long term. We have repeatedly listed all possible factors for the resumption of the fall of the British currency, however, there are still no factors that could support the pound. It seems that this whole situation will end for the pound/dollar pair in much the same way as for the euro/dollar pair. After several months of moaning around local lows, the bears will simply get tired and resume the depreciation of the pound. We have been talking for several months about the fact that the euro has no other way but to continue falling. All this time, the pair regularly bounced off the lows and tried to start an upward trend. But each time it ended very quickly, as the bulls had no reason to make large purchases. It's the same now with the pound. What are the reasons for its rise in price, if the UK economy continues to slow down, the Bank of England is afraid to ease monetary policy, the country has entered a "transition period", which is a preliminary stage of Brexit, continues to lose 70 billion pounds a year, and the economy may receive an even stronger blow in the form of no trade agreements with the EU and the US after 2020?
No important macroeconomic publications are scheduled for Monday in the UK and the US. Thus, on the first trading day of the week, there is likely to be a very weak and non-trend movement. Approximately the same was observed on Friday. Of course, Boris Johnson may give the markets another surprise in the form of another dismissal in the cabinet or government, but it is unlikely to happen so quickly after the first wave of resignations and dismissals. Thus, we believe that no major changes in the value of the pound will occur tomorrow, and the pair will seek to continue the correction. Traders will have to wait until at least Tuesday for more serious price changes when macroeconomic reports will start arriving from the UK and the States.
From a technical point of view, the pair once again changed the trend to an upward one. However, on Friday, the pound/dollar pair failed to overcome the Murray level of "6/8" - 1.3062, which was followed by a rebound. Thus, the pair may continue to adjust on Monday, and fundamental factors will be required to overcome this level. Since there will be a sufficient amount of macroeconomic information this week, the direction of the pound's movement will directly depend on this information.
The average volatility of the pound/dollar pair has decreased to 76 points over the past 5 days and continues to fall. According to the current volatility level, the working channel on February 17 will be limited to the levels of 1.2967-1.3119. An empty news calendar on Monday does not suggest any particular direction for the day. Most likely, one of the borders of the volatility corridor will not be worked out.
Nearest support levels:
S1 - 1.3000
S2 - 1.2939
S3 - 1.2878
Nearest resistance levels:
R1 - 1.3062
R2 - 1.3123
R3 - 1.3184
Trading recommendations:
The GBP/USD pair is trying to continue its upward movement. Thus, formally, the current purchases of the pound with the targets of 1.3062 and 1.3119 (the Heiken Ashi indicator turned up) is now relevant. However, we still do not see how the British currency can now perform growth in fundamental terms. It is recommended to return to more reasonable sales of the pound after fixing the price below the moving average line with the first targets of 1.2939 and 1.2878.
In addition to the technical picture, you should also take into account the fundamental data and the time of their release.
Explanation of the illustrations:
The highest linear regression channel is the blue unidirectional lines.
The lowest linear regression channel is the purple unidirectional lines.
CCI - blue line in the indicator window.
Moving average (20; smoothed) - blue line on the price chart.
Murray levels - multi-colored horizontal stripes.
Heiken Ashi is an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
