For the last trading day, the currency pair pound / dollar showed an extremely low volatility of 42 points, remaining, to put it in a strictly speaking manner, in one place. From the point of view of technical analysis, we see a rather sharp slowdown after the quotation has gone down to the value of 1.2711. The narrow stagnation-pullback that we observed clearly reflects a large number of short positions. You just analyze the last trading week, how rapid the downward movement was. Bearish positions are overheated - of course, but they are held, and this is a fact, otherwise they would have seen a rapid correction. For the information and the news background, the next meeting of British Prime Minister Theresa May with her cabinets, where she is trying to find support in order to push the divorce agreement with the European Union once again. Theresa is currently discussing proposals to make the agreement more attractive to the opposition Labor Party, potentially including tighter customs relations with the bloc. Let me remind you that last week, the pound collapsed by more than 2%, since Theresa May announced that she would set a timetable for her departure, and it looks like her receiver will seek a hard exit from the EU if the deadlines are tight. Returning to the news background, we see that no statistics were released yesterday, and the only thing that can be singled out is the presentation by Fed Chairman Jerome Powell on the subject of the growing threats to the stability of the financial system of the United States, which we saw on the night of May 20 to 21 (11:00 UTC+00.) As much as speculators wanted to ride on this show, as a result, we didn't see anything like that. Why? Jerome Powell didn't say anything new in his words. Yes, there is a threat to the economy of the United States from the trade war with China, but the Fed takes a waiting position, analyzing everything that happens. At the same time, the head of the Federal Reserve Bank of Atlanta, Raphael Bostic, said yesterday that he did not expect an early reduction in interest rates.
"I would say that I don't expect a quick reduction in rates, especially by September. Something must happen to make this happen," said Bostic.
Today, in terms of the economic calendar, there are a number of statements from the UK regarding inflation: the head of the Bank of England Carney; BoE MPC member Saunders; Bank of England Representative Tenreyro; Member of the Broadbent Monetary Policy Committee. Whether it will affect the dynamics of the pound in any way, I doubt, since during this time in Britain, there is only one hot topic - Brexit. In the afternoon, we are waiting for statistics on sales in the secondary housing market for April in the United States, where they are waiting for an increase from 5.21M to 5.35M. The news is positive for the US currency, but traders are still waiting for the main news regarding the publication of the FOMC protocol tomorrow at 18:00 UTC+00.
Further development
Analyzing the current trading schedule, we see that the bearish interest is gaining new momentum, overcoming at least yesterday. It is likely to assume that the general Brexit background puts pressure on the English currency, and in this scenario, the dollar looks just fine. For this reason, we do not see the long-awaited correction, continuing to overheat short positions. Now, traders are considering a further decline towards the level of 1.2620, then we will see later.
Based on the available data, it is possible to decompose a number of variations. Let's consider them:
- Positions to buy will be considered, in the event of any slowdown in working out near the level of 1.2620.
- Sell positions continue towards the level of 1.2620. Further deals are considered in the case of a clear fixation lower than 1.2600.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that the short-term perspective did not stay long in the neutral phase and returned to the downside due to non-terminating short positions. Meanwhile, intraday and mid-term retains a downward interest on the general background of the market.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(May 21 was based on the time of publication of the article)
The current time volatility is 44 points. If the inertial move persists, amid the breakdown of yesterday's stagnation, volatility may start to grow towards the daily average.
Key levels
Zones of resistance: 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700.
Support areas: 1.2620; 1,2500 *; 1.2350 **.
* Periodic level
** Range Level
