4-hour timeframe
Technical data:
The upper channel of linear regression: direction – sideways.
The lower channel of linear regression: direction – down.
The moving average (20; smoothed) – sideways.
CCI: 158.5970
A day earlier, we wrote that Jean-Claude Juncker considered Johnson's plan "requiring refinement" and having "controversial issues." Such rhetoric of the President of the European Commission left room for maneuver. However, later, when Johnson's plan began to be criticized by other leaders of EU member States and political scientists, it became clear that Juncker simply expressed himself very restrained and polite. The new plan for Brexit does not suit the European Union and moreover, it does not carry again any proposals that can solve the problem with the border on the island of Ireland structurally and completely. The main proposals of Boris Johnson are to not conduct any checks and searches on the border between the countries but to conduct them 10 kilometers from this border and only if necessary. And fill out all customs declarations remotely. European politicians still do not like this option. Donald Tusk wrote on his Twitter: "Today, I had two phone calls about Brexit, first with Dublin, then with London. My message to Leo Varadkar: we fully support Ireland. My message to Boris Johnson: we remain open, but not convinced."
Well, the Prime Minister of Great Britain continues to try to remove British parliamentarians from their work. Johnson conceived the second prorogation of the Parliament, from October 8 to 14. And although this time Johnson's initiative is much less questionable, since the suspension of Parliament's work is planned for a week, and before the opening of a new session, which will begin with the Throne Speech (speech performed by Queen Elizabeth II), this is normal practice, still it is surprising.
By the way, not only in the European Union were skeptical of Johnson's plan. The deputies of the House of Commons did not show much enthusiasm when they learned the essence of the new plan of the Prime Minister. Opposition leader Jeremy Corbin said: "Three years later, the government has yet to find a solution to the Irish border problem and Good Friday agreement. If earlier the government wanted to have no border in Ireland, today it proposes to create two borders." In essence, this means that the British Parliament will not support Johnson's plan. What's next? Johnson said that if the EU rejects this offer, then Britain will leave the EU without an agreement. So we move on to the most interesting act of the play because the question is "how is Johnson going to get Britain out of the EU without an agreement of Parliament?" Remains open.
The pound paired with the dollar, meanwhile, has fixed above the moving average line, which allows it to continue strengthening. However, as we have said many times, the fundamental aspect remains not on the side of the British currency. This week, for example, Britain has already managed to fall in indexes of business activity in services, construction and a composite index. In industry, business activity rose slightly but remained below 50.0. Thus, it will not be surprising if the downward trend on the GBP/USD pair is resumed shortly.
Nearest support levels:
S1 – 1.2329
S2 – 1.2268
S3 – 1.2207
Nearest resistance levels:
R1 – 1.2390
R2 – 1.2451
R3 – 1.2512
Trading recommendations:
The GBP/USD pair continues its upward correction on October 4. Thus, today, bears are still advised to expect its completion and in the case of reverse consolidation below the moving, resume sales of the pound/dollar pair with the first target of 1.2268. It is recommended to buy a pair with the target of 1.2390, while the bulls are held above the moving average.
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 lines of the unidirectional movement.
The lower channel of linear regression – 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