4-hour timeframe
Technical data:
The upper channel of linear regression: direction – upward.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – down.
CCI: -42.6951
By and large, there have been no changes in the Brexit procedure in recent days. Boris Johnson continues to boast of his "generous and fair" proposals to the EU. And the EU continues to call them unacceptable and gently hint that Johnson does not want to make a "deal" and shift the responsibility for the "hard" Brexit to Brussels. According to the latest information, Boris Johnson sent an improved proposal to the leaders of the European Union and offered to discuss all the controversial points that may not suit the EU government. There has been no response from the European side, but we all understand that the chances that the parties will agree in the remaining 10 days before the EU summit are negligible. Moreover, the European Union is not satisfied with the very essence of the proposal of the British Prime Minister, who wants to split the Irish border, and the points of inspection and customs just move some distance from the actual border between the two countries. The European Union stands on its position – either "backstop" or "offer an option that suits us." Just as China understands Trump's weakness in a trade war, the European Union understands that Boris Johnson is unlikely to be able to take the country out of the EU under a "hard" scenario. After all, this may be followed by criminal punishment, as Johnson will go to a direct violation of the law. Plus, we have repeatedly noted that Europe does not want to lose the UK. Thus, Juncker and the company simply have nothing to rush into the issue of "divorce" with Britain. No reason to make concessions on the issues of agreement on "soft" Brexit. The European government understands that Boris Johnson's political ratings will fall as he suffers defeats. He already suffered enough of them. Moreover, Johnson could face impeachment and a vote of no confidence, the UK Parliament can change its composition at any time, as soon as the Prime Minister and deputies will agree on the need for re-election. That is, the situation is completely shaky, unstable, and the vector of the entire Brexit process can change instantly in any direction. The Brexit procedure may have time to take part in the third Prime Minister of the Kingdom. To release the United Kingdom just like that, and even on the terms of London for the EU, makes no sense. Therefore, the whole process is delayed and risks to be delayed at least until January 2020, and the pound falls again, risking the renewal of its multi-year lows in the next month.
The second topic, which could hypothetically influence the movement of the pound/dollar currency pair, is the regular speeches of Jerome Powell. Since the Fed has set its sights on easing monetary policy, thanks to Trump, every rate cut or hint at a rate cut at a future meeting of the regulator is potentially dangerous for the dollar. Even paired with the pound. But Powell remains silent, the Fed does not hint at a possible decision at the end of October and is limited only to general phrases. Today, a statement by the head of the Bank of England Mark Carney should also take place, which will also cause interest among traders, as recently there have been rumors about a possible reduction in the key rate. And the "bearish" rhetoric from Carney is almost guaranteed to send the pound to conquer new lowlands.
From a technical point of view, the downward movement continues, so the nearest target is the Murray level of "1/8" – 1.2207, which the bears can work out, both with the help of fundamental factors and without them.
Nearest support levels:
S1 – 1.2268
S2 – 1.2238
S3 – 1.2207
Nearest resistance levels:
R1 – 1.2299
R2 – 1.2329
R3 – 1.2360
Trading recommendations:
The GBP/USD pair settled below the moving average line. Thus, today it is recommended to sell the pound/dollar pair with targets of 1.2238 and 1.2207. The bulls have lost the initiative and remain extremely weak.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustrations:
The upper channel of linear regression – the blue lines of the unidirectional movement.
The lower channel of linear regression – the purple line of the unidirectional movement.
CCI – the blue line in the indicator regression window.
The moving average (20; smoothed) – the blue line on the price chart.
Support and resistance – red horizontal lines.
Heiken Ashi – an indicator that colors bars in blue or purple.
