For the last trading day, the pound / dollar currency pair showed a moderate volatility of 76 points, as a result, the quote went to the correction stage. From the point of view of technical analysis, we see that the intensive downward movement has led us to the minimum of January of the current year of 1.2433 (01/03/2019), where the quotation of the expected felt supports, later forming a correction movement. As written in the previous review, traders in advance started fixing their short positions due to the risk of correction in the form of the psychological value of 1.2433 and possible Fed rhetoric. Considering the trading schedule in general terms, we see that the intensive downward movement from the beginning of the month did not have any pullbacks or corrections, short positions overheated, which played into the hands of speculators. If we look further, we see that the main downward trend is striving for recovery, and it’s just at least this year where sellers are holding back; however, this remains a question for a long time now.
The key event of the previous day in terms of the news flow, of course, was the speech of Fed Chairman Jerome Powell in the US Congress, where he announced the termination of asset repurchase which is expected to be held in September of this year. The Fed chief also noted that the uncertainty about the outcome of trade disputes and concerns about the global economy continue to put pressure on the situation outlook in the US economy. There were no specifics on the reduction of the key rate in the words of Jerome Powell, although there are reports from various media sources about the reduction. The only one who announced the rate cut is the head of the Federal Reserve Bank of St. Louis, James Bullard, but it was presented after Mr. Powell’s speech in the Congress. Hence the question of where growth comes from, will become clear today. Returning to the news flow, we see that yesterday, there was data on industrial production in the UK, showing a good increase of 0.9%. Although it predicted a more substantial increase, by 1.1%, one should not forget that the May indicators were very dismal -1.1%, and the current value of 0.9% looks very good. In the United States published data on inventories in the warehouses of wholesale trade in the United States received another increase of 0.4%.
Today, in terms of the economic calendar, the second speech by Fed Chairman Jerome Powell awaits in the US Congress, where we will again discuss the fate of monetary policy, and perhaps there will be explanations regarding the refinancing rate. In terms of statistics, there are data on inflation in the United States, where a slowdown is expected from 1.8% to 1.6%.
Analyzing the current trading schedule, we see that after the impulse surge reflected in the corrective course, the quotation felt periodic resistance around the peak of the July 8 retracement (1.2538). Probably assume a temporary chat, where traders with existing trading positions from a value of 1.2480 produce a partial exit. What to expect next? – we analyze the behavior of quotes relative to the current coordinate and fixation points, as there are several assumptions: First, the bumper is 1.2500 / 1.2540; The second is an analysis of the boundaries of 1.2500 / 1.2540 for clear fixations outside, for setting further trade orders (BUY / SELL).
On the basis of the available information, it is possible to decompose a number of variations, let’s specify them:
– Positions to buy, as written in the previous review , traders led from a value of 1.2480, now a temporary regrouping. Top-up is considered in the case of a clear output higher than 1.2540-1.2550.
– We do not have positions for sale, traders actively fixed short positions on July 9 – 10. Possible consideration of these transactions will be made in case of price fixing lower than 1.2500.
Analyzing a different sector of timeframes (TF), we see that indicators in the short and intraday perspective signal an increase due to the structure of the current correction. The medium-term outlook retains a downward interest against the background of a general decline since the beginning of the month.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(July 11 was based on the time of publication of the article)
The current time volatility is 41 points. It is likely to assume that volatility may increase due to the news and news background, which continues to hold the market today.
Zones of resistance: 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300
Support areas: 1.2500; 1.2430 *; 1.2350 **; 1.2100 **; 1.2000.
* Periodic level
** Range Level
*** The article is based on the principle of conducting a transaction, with daily adjustment.
The material has been provided by InstaForex Company – www.instaforex.com