4-hour timeframe
Technical data:
The upper channel of linear regression: direction – down.
The upper channel of linear regression: direction – up.
The moving average (20; smoothed) – down.
CCI: -140.3389
Boris Johnson's illegal prorogation of Parliament ended on September 25. This is another victory for the opposition, led by Jeremy Corbyn, but the pound has ceased to respond positively to these local victories. After all, by and large, "things are still there." Yes, parliamentarians have resumed their work, now they can again control the actions of the Prime Minister, "put sticks in his wheels" and influence his decisions. However, what has changed in the context of Brexit in recent weeks? Nothing. Johnson is not going to resign (who would doubt), despite the furious calls of Jeremy Corbyn and other opposition deputies. Moreover, the Prime Minister believes that the decision of the Supreme Court is wrong and does not agree with him. The opposition's hands are still tied, as the deputies cannot remove Johnson from his post. Brexit seems to be delayed, but Johnson did not ask for an official delay from EU leaders and continues to say that it will be implemented on October 31 and there will be no new postponements of this date. An unprecedented situation. Utter political chaos.
In such a situation, it would be logical to hold re-elections to Parliament, but both sides want and fear them at the same time. There's too much at stake. Boris Johnson wants to hold re-election, hoping to strengthen the forces of the ruling party, that is, the conservatives. If that happens, the opposition will become weaker, and it will be harder to resist Johnson's decisions. The opposition is afraid of this. Johnson, though promoting the idea of early elections, also understands that in two months as Prime Minister, he suffered at least five defeats, and how many victories he won? By our count, 0. It is not possible to agree with Brussels. "Push" Brexit through Parliament failed. The prorogation was overturned by the Supreme Court. In such a situation, the ratings of the Conservative Party could be reduced. After all, no one knows what the result of the re-election will be if, for example, they are held tomorrow. All sociological studies conducted on 2-3 thousand people cannot reflect the real picture of things. They only show the mood of the electorate with a certain degree of probability. Thus, re-elections could resolve differences in Parliament, but both sides are afraid of them. Also, it is impossible to exclude the option in which neither the Laborites nor the Conservatives will be able to gain more parliamentary seats than they currently have. In this case, the re-election will be just a formality and a waste of time.
Traders just have to watch what is happening and react. Now, the pound began to adjust after a few weeks of growth, as the UK currency does not have a fundamental recharge. Thus, it will be possible to return to purchases of the British currency after the reverse consolidation of traders above the moving average line.
Nearest support levels:
S1 – 1.2360
S2 – 1.2329
S3 – 1.2299
Nearest resistance levels:
R1 – 1.2390
R2 – 1.2421
R3 – 1.2451
Trading recommendations:
The GBP/USD currency pair fixed below the moving average. Thus, traders are advised to buy the US currency with targets of 1.2329 and 1.2268. Short positions are relevant until the Heiken Ashi indicator turns up. Mark Carney, Chairman of the Bank of England, is scheduled to speak today.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of illustrations:
The upper linear regression channel – the blue line of the unidirectional movement.
The lower linear regression channel – 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.
The material has been provided by InstaForex Company - www.instaforex.com