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: 335.2473

The British currency in the Asian trading session of the last trading day of the week has already managed to grow by 300 points. This was the reaction of traders to the preliminary victory of Boris Johnson in the elections. Given the maximum volatility of the GBP/USD pair, it is now quite problematic to trade the upward movement. It is not known how much longer it will last and when the downward correction will begin, which usually always happens after a strong rise or fall. However, the most important thing now for the pair and the whole of the UK is that Boris Johnson and his party seem to get the necessary majority in parliament after all. According to the latest data, 368 seats will be won by the conservatives, 191 - by Labor, the other parties and deputies - 91. Last night, we wrote that the probability of Johnson's Conservative Party winning is about 80%. There were, of course, concerns about the 100 regions that could vote both Conservative and Labor. However, these fears were not to be realized. So now is the time to follow Boris Johnson's advice, open the champagne and celebrate. Celebrate while there are times and opportunities. Because in a short time, the British pound and the whole of the UK will come out of a state of euphoria and resume the harsh everyday life.

Harsh weekdays in which macroeconomic statistics in the UK continue to deteriorate every month without any Brexit. Harsh weekdays, when Boris Johnson and his government will have to negotiate with the European Union on trade relations after Brexit, to negotiate until the end of 2020, when the "transition period" ends, or ask for a new delay from the European Union. The harsh everyday life when you have to negotiate on a trade agreement with the United States and Donald Trump. Needless to say, these trade negotiations can be extremely difficult and lengthy, and the US leader himself, who today speaks well about the UK and Boris Johnson, tomorrow can change his rhetoric to the opposite and accuse London of "unfair treatment of America." Thus, according to many experts, a "majority government" in parliament is a victory for Boris Johnson. The implementation of Brexit - too. However, the pound will not rise permanently based on these two factors.

The greatest concern we have is precisely the macroeconomic reports. As the last meeting of the Fed showed, Jerome Powell is optimistic about the future and positively assesses the current monetary policy and the state of the US economy. But the Bank of England clearly cannot boast of such a mood. At the last meeting, two of the nine members of the Monetary Committee voted "in favor" of a 0.25% rate cut. Given the macroeconomic statistics in the UK, not even for the last few weeks, but for the last two months, the British regulator has no other options but to ease monetary policy. Soften and hope that after the official exit from the European Union, the situation will not worsen even more. Recall that at a time when the Brexit process "went according to plan" and there was no political crisis in Britain, the greatest fears of Mark Carney and many experts were exactly how the UK will live after the "divorce" from the EU, how many years it will take to restore the economy. Brexit is not the end of the UK. It is obvious that sooner or later the British will learn to live outside the EU. The economy will reach the usual growth rates. However, the economy will suffer a serious blow in any case, respectively, and the pound may resume its decline, despite the possible end of the Brexit epic.

From a technical point of view, it is now necessary for the markets and traders to calm down. After the 300-point growth of the pair, it is impractical to start buying it. However, the fall of the pair within the correction is not obvious. Thus, we believe that the best option is to wait until the emotions subside and the pair returns to the usual trading volumes.

The average volatility of the pound/dollar pair in the last 5 days rose to 97 points, in the last 30 days - 75 points. Thanks to today, the average volatility will grow even stronger, but it is worth understanding that 300 points tonight are an exception to the rule. Thus, they cannot even be taken into account when calculating the average volatility of the pound/dollar pair. It is clear that the levels of maximum volatility (the upper level) to date, the pair overcame at night.

Nearest support levels:

S1 - 1.3428

S2 - 1.3367

S3 - 1.3306

Nearest resistance levels:

R1 - 1.3489

R2 - 1.3550

Trading recommendations:

The GBP/USD pair resumed its upward movement. Thus, in these conditions, it is recommended to remain in the purchases of the pound until the reversal of the Heiken Ashi indicator down from the targets of 1.3489 and 1.3550. It is recommended to return to sales not earlier than the crossing of the moving average line by traders, which is not expected soon.

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.