4-hour timeframe
Amplitude of the last 5 days (high-low): 97p - 147p - 81p - 49p - 107p.
Average volatility over the past 5 days: 96p (high).
Great Britain and the European Union are like two tennis players - they throw the ball of charges through the net. Boris Johnson has repeatedly stated that he has made a "generous and fair" proposal to Brussels and is trying in every possible way to find a common language with its European colleagues and conclude a "deal" as the Parliament wishes. Unfortunately, the EU does not consider this proposal "generous and fair". There is one very important question for Boris Johnson: why did he not spend the first month and a half of his reign on negotiations with the European Union, but on preparing for the hard Brexit? Recall that about 100 million pounds were allocated only for advertising hard exit, to inform the entire population of the United Kingdom about the upcoming exit and all its aspects. Since, according to many media and the public as a whole, someone alone should be to blame for the disordered Brexit, the EU also does not want to take the blame. Not later than today, the head of the European Commission, Jean-Claude Juncker, once again stated that a "divorce" without an agreement would have disastrous consequences for the UK. "I do not accept the accusation that the possible failure of the Brexit negotiations is due to the EU's position," Juncker said. "If this fails in the end, the responsibility lies solely with the British side," said Jean-Claude.
Meanwhile, it was reported that immediately after the EU summit, which is now defined as the last chance to conclude a deal, the British Parliament will meet for a meeting, within which the fate of Brexit will be decided. It is expected that if the deal is somehow miraculously agreed between Johnson and the European deputies, then it will be necessary for the British Parliament to approve it as soon as possible. If not, then at a cruising pace it will be necessary to develop a new plan of action, as well as try to understand what Boris Johnson will do and stop him on time if he does try to pull the country out of the EU on October 31.
The pound remained on dry rations today, as there were no really important news for the day. But, despite the news drought, traders were still able to make a jump up, almost work out the critical Kijun-sen line and return to their original positions below the support level of 1.2222. Thus, the downward movement is again more priority and likely. Unfortunately, the pound will continue to remain under pressure from investors at least until October 19, when it becomes clear what the UK expects in the coming months. In theory, 10 days is even enough for traders to pull down the pound/dollar pair to multi-year lows near the price level of 1.1958. We will not evaluate the chances of executing a particular Brexit option now. A huge number of experts and analysts were already engaged in this, and Britain, as it could not leave the EU, is still not able to do this.
The technical picture of the pair now also implies a continued downward movement. The Ichimoku indicator has formed a "dead cross", which is strong, all indicators are pointing down, so short positions are still advisable now.
Trading recommendations:
The pound/dollar currency pair resumed its downward movement. Thus, we recommend that you now support already open short positions with targets at 1.2134 and 1.2109. The fundamental background remains on the side of the US currency, so purchasing the pound is impractical at the moment.
In addition to the technical picture, fundamental data and the time of their release should also be considered.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com