4-hour timeframe
Technical data:
The upper channel of linear regression: direction - up.
The lower channel of linear regression: direction - up.
The moving average (20; smoothed) - up.
CCI: 160.9320
The GBP/USD currency pair continues a fairly strong upward movement, no matter what. It is unlikely that yesterday's strengthening of the pound can be somehow linked to weak macroeconomic data from overseas. Recall that the index of business activity in the ISM service sector was worse than forecast values, as well as the report on the change in the number of employees in the private sector ADP. Until yesterday, for more than a month, traders stubbornly ignored any macroeconomic statistics from the UK and America, some of which could send the British pound far down. Now, the volatility of the pound/dollar pair has increased, the trend movement has resumed. And what about the reasons for what is happening? And the reasons are still the same - the markets stubbornly believe in the victory of Boris Johnson's party in the elections and the implementation of Brexit with a "deal" before the end of January. This is the scenario considered by most traders now. It is this belief of traders that pushes the British pound up when macroeconomic statistics should push the pair down. In the current situation, realizing that traders stubbornly do not want to react to anything other than the new promises of Boris Johnson and in addition to the data of various sociological studies, speaking in favor of the advantage of the conservative party over Labor, it remains only to trade on the basis of technical factors and wait for the results of parliamentary elections.
The British Prime Minister himself has always been generous with promises. We have already witnessed about three months of a continuous stream of promises by Boris Johnson to withdraw the country from the European Union before October 31. It didn't work. Now, Boris Johnson is promising to end Brexit within 100 days if the Conservative Party wins the election. Several questions immediately arise: 1) how is Johnson going to withdraw the country from the EU, if the conservatives fail to form a "parliamentary majority"? 2) why exactly within 100 days if the Brexit deadline at the moment is January 31? Also, the Prime Minister, who seems willing to promise anything to win the election, offers the British almost no exchange: lower taxes in exchange for winning the election of the conservatives. Johnson also promised to increase spending on education, security and immigration issues. "If the conservative majority wins next week, we will have Brexit by the end of January. 2020 will be the year we finally put the objections and uncertainty over Brexit behind us. We will make parliament work again," Boris Johnson said. In general, we cannot note anything new in the actions and statements of the Prime Minister. The same strategy of action, which involves promises of "golden mountains" and focusing on the negative aspects of life in case of defeat of the conservatives in the elections. According to the latest sociological research, the situation in the balance of power between the conservatives and Labor is not changing. Still, the conservatives are more popular and ahead of the Labor Party by 9-10%. But how far ahead will they be on December 12?
On Thursday, December 5, the calendar of macroeconomic events in the UK and the US is empty. However, even if certain events were not planned today, it would hardly change anything for the pound/dollar pair, whose traders now react exclusively to political news, which is reduced to the calculation of preliminary ratings and statements by Boris Johnson. Thus, the strengthening of the pound may continue today, if no news contrary to the expectations of market participants will not be received. From a technical point of view, all the last bars of the Heiken Ashi indicator are colored purple, which indicates the continuation of the upward trend of intraday. Accordingly, long positions continue to be relevant, they should be supported.
The average volatility of the pound/dollar pair in the last 5 days rose to 96 points and in the last 30 days - to 74 points. Thus, volatility is rising after a month of frankly sluggish and boring trading. Based on the average volatility of the pound/ dollar pair, the maximum possible level for today is 1.3196 if the pair continuously moves up all day. Based on the same indicators of volatility, we can conclude that the sale of the British currency today will not become relevant since the price is unlikely to be able to consolidate below the moving average line today.
Nearest support levels:
S1 - 1.3092
S2 - 1.3062
S3 - 1.3031
Nearest resistance levels:
R1 - 1.3123
Trading recommendations:
The GBP/USD currency pair resumed its upward trend. Thus, in these conditions, it is recommended to continue to buy the pound until the reversal of the Heiken Ashi indicator down to 1.3196. It is not recommended to return to sales today, as the price is too far from the moving average line. All macroeconomic statistics are now ignored by traders, political and technical factors are in the foreground.
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 line of the unidirectional movement.
The lower channel of linear regression - the purple line of the unidirectional movement.
CCI - the blue line in the regression window of the indicator.
The moving average (20; smoothed) - the blue line on the price chart.
Support and resistance - the red horizontal lines.
Heiken Ashi - an indicator that colors bars in blue or purple.
Possible variants of the price movement:
Red and green arrows.
