For the last trading day, the currency pair pound / dollar showed a low volatility of 78 points, which was expressed in the slowdown and subsequent pullback. From the point of view of technical analysis, we see that the quotation slowed down after reaching the key level of 1.2620, and then moved into the rollback stage smoothly. Overall plan: for three weeks we watched a not tedious descending movement, having as a result more than 550 points without any correction, whether the quote overheated is unconditional. Oversold, overheating - these words have tormented traders for more than one day, so what, the correction has come? The question is, of course, a philosophical one, but we will return to it later. Now, let's talk about the news flow. Brexit background has been densely populated in the market and in the minds of speculative investors, even when we don't have any statements made by dignitaries, the market still reacts cautiously to everything and is more prone to draining the pound. From the news feed, we had statistics on new home sales in the United States, where we were expected to receive a decline, but stronger: Prev. 8.1% --- Prog. -2.8% ---- Fact. -6.9%, perhaps against this background, the oversold pound received at least some support.
Today, in terms of the economic calendar, we have statistics on UK retail sales, where there is nothing good. According to forecasts, they expect a decline from 6.2% to 4.2%. In the afternoon, there will be data on the volume of orders for durable goods in the United States, where they also expect a decline from 2.8% to -2.0%. As it turns out, the outgoing data for both countries, frankly, not very much. The first thing that comes to mind is a temporary dragging in the form of a tug of trading power. What can put additional pressure is the information background, which can set the direction. If we look in more detail at this moment, we see that the British Prime Minister Theresa May will announce her resignation from the post of leader.
The upcoming trading week in terms of the economic calendar is empty. The week starts with a day off in the United States and the UK, although some kind of activity begins only on Thursday, where the data on US GDP will be released, and, in principle, everything. In any case, at least a week has a modest amount of statistical data in it, do not forget that the information background does not sleep.
Monday
Closed: USA - Memorial Day
Closed: UK - Spring Bank Holidays
Thursday
United States 12:30 UTC+00 - GDP (q / q) (Q1): Prev. 3.2% ---> Forecast 3.1%
United States 12:30 UTC +00 - The number of initial claims for unemployment benefits
United States 14:00 UTC +00 - Index of pending sales in the real estate market (m / m) (Apr): Prev. 3.8% ---> Forecast 1.1%
Friday
United Kingdom 8:30 Universal time - The volume of mortgage lending (Apr): Prev. 4.12V ---> Forecast 3.54
These are preliminary and subject to change.
Further development
Analyzing the current trading schedule, we see that the quotation is trying to correct, but on its way there is a periodic value of 1.2690 and a huge information and news background that holds it. The first thing we are considering is a temporary fluctuation within 1.2620 / 1.2700. Then we are already analyzing the outgoing information flow, in particular, the reaction to Theresa May. There are not so many options for the price behavior. Thus, we will either stay within the range, or quickly break through it. Our methodology will be incorporated in the form of analysis of fixation points outside the expected boundaries, and then entering the market.
Based on the available data, it is possible to decompose a number of variations. Let's consider them:
- Buying positions will be considered in case of price fixing higher than 1.2700.
- Sell positions will be considered in the case of price fixing lower than 1.2590, with a prospect of 1.2500, the first point.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short-term perspective jump arbitrarily, with respect to current indicators, interest is descending. Intraday perspective has changed interest from descending to ascending due to rollback. The medium-term outlook keeps the downward interest on the general decline.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(May 24, was based on the publication of the article)
The current time volatility is 36 points. If the information background puts pressure on the market, then the volatility will quickly overcome the average daily value, otherwise we will be trapped in a range, relative to which and see the current volatility.
Key levels
Zones of resistance: 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 * 1.3000 **; 1.3180 *; 1,3300 **; 1.3440; 1.3580 *; 1.3700
Support areas: 1.2620; 1,2500 *; 1.2350 **.
* Periodic level
** Range Level
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