4-hour timeframe
The amplitude of the last 5 days (high-low): 126p - 112p - 80p - 253p - 158p.
Average amplitude for the last 5 days: 146p (151p).
The third trading day of the week ends surprisingly favourably for the British pound. Today's information that 48 conservatives have launched a vote of confidence in party leader Theresa May. Accordingly, there will be a vote, in which May could be dismissed. Of course, the vote does not mean that other members of the party will support this initiative. Therefore, Theresa May could well remain at the helm of the country. Here another is important. Information about the possible departure of Theresa May caused a strong demand for the British pound. This means a complete lack of faith of the market in the ability of May to resolve the issue of Brexit, so it was really beneficial to the people of Great Britain. Moreover, the markets do not believe that the Chequers plan will be supported in Parliament. In general, the deadline for voting in Parliament is January 21, and until then it is now necessary to vote on the no-confidence vote in Theresa May. If the majority of the party supports the resignation of May, it will be necessary to choose a new party leader and prime minister. All this will take a lot of time and is very disadvantageous to the British currency. It seems that in the current conditions, the pound is ready to go up if Theresa May resigns from her post, and the new prime minister will be tougher in negotiations with the EU. On the other hand, the EU has already stated that there will be no new negotiations. So does not the entire Brexit procedure seek cancellation of individual policies? Perhaps this is not even the worst idea for the UK?
Trading recommendations:
The GBP/USD currency pair started a strong upward movement due to the fundamental support. It is difficult to say how long this growth will last. Purchases are now associated with increased risks, especially since there is no "Golden cross", and the price has not yet even managed to overcome the Kijun-sen line.
Short positions can be considered again if the pair bounces off the critical line. In this case, the downward trend in the instrument will continue, and the targets for shorts will be the support levels of 1.2560 and 1.2474.
In addition to the technical picture, fundamental data and the timing of their release should also be taken into account.
Explanation of illustration:
Ichimoku Indicator:
Tenkan-sen-red line.
Kijun-sen – blue line.
Senkou span a – light brown dotted line.
Senkou span B – light purple dotted line.
Chikou span – green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD:
Red line and histogram with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com