4-hour timeframe
Amplitude of the last 5 days (high-low): 272p - 680p - 320p - 523p - 268p.
Average volatility over the past 5 days: 413p (high).
The British pound is still the most volatile currency from the main basket. For example, during today's corrective day, the pound/dollar pair passed about 300 points. Thus, we can draw an almost unambiguous conclusion: the markets are saturated with purchases of the US currency, but remain in an overly excited state. The British currency stopped falling, but the pound/dollar pair has not grown. This means that for the most part, traders do not see the reasons and grounds for buying the British currency. The US dollar has ceased to be in demand on the basis of all the actions of the Federal Reserve, which announced an unlimited redemption of various kinds of securities in order to flood the economy with cash and save it from collapse. This is US President Donald Trump and Stephen Mnuchin who failed to push through Congress a bill that involves injecting an additional $1.6 trillion into the economy, which should have been directed to help the US population (each citizen can get about $1000), to help airlines, some of which are on the verge of bankruptcy, as well as helping small businesses that are also experiencing, for obvious reasons, not the best of times. Nevertheless, by majority vote, the bill was already blocked twice in the Senate, mainly due to the fact that it is opposed by the Democrats, who consider this package of assistance to be too expensive and aimed mainly at helping companies, rather than US workers. Democrats also believe that Trump wants to once again be promoted through such packages of assistance to the US population, because presidential elections will be held this year ...
Meanwhile, business activity data for various sectors of the economy have also been released in the UK today. The numbers are almost identical to European. In the services sector, business activity in Great Britain crashed down to a preliminary estimate of 35.7 in March. In the manufacturing sector - 48 (!!!). Thus, the picture is the same as in Germany and in the European Union. The service sector collapsed, and the manufacturing sector shows a slight slowdown in business activity. The United States is still more interesting. The decline was significantly higher than experts expected in the services sector. The actual value is 39.1 with the February value of 49.4. But the production sector lost only a few points and amounted to 49.2. Such a value in current realities can even be called high. Composite PMI was 40.5 points. Thus, in general, the situation is approximately the same both in the United States and in Europe.
Meanwhile, Trump, who seems to be thinking much more about how to win the presidential race this year than about the health of his fellow citizens, offers to abolish all quarantine measures. On his Twitter, the US president made a cryptic entry: "treatment of a problem cannot be worse in consequences than the problem itself." Despite the fact that the Fed and the Ministry of Finance are doing everything possible to save the economy, the US leader believes that a significant reduction cannot be avoided. And the longer the quarantine lasts, the stronger the reduction. And on the eve of the election, Trump does not need a contraction in the economy. It is precisely the growth of the US economy that the head of the White House has repeatedly pressed in his election speeches. Thus, now that the US economy can roll back to 2016 levels, Trump is losing one of his main trump cards before the Democrats. "Our country was not created for closure. We are going to open our country to business, because our country must be open," Trump said this week. At the same time, medical experts believe that the United States has not even entered the most critical stage of the epidemic. That is, the peak of the spread of the virus is yet to come. And if quarantine is now lifted, then the number of sick people will increase many times over. The US president needs a strong economy, so "let's give everyone $1,000 each and kick them back to work." However, many experts believe that "to kill two birds with one stone" in this situation will not work. If you open the economy, the infection curve will change its appearance, that is, the number of infected people will simply increase. If this is not done, then the economy will not be revived in the near future. Therefore, the dilemma: what is more important to Trump - to raise the economy or the lives of his own citizens?
Meanwhile, some agencies are already beginning to calculate the possible losses to the UK economy from a pandemic. The figures are terrifying. Experts believe that the British economy could shrink by 5%. And again, everything will depend on how long the quarantine lasts and how quickly the spread of infection can be stopped. According to the latest data, almost 7,000 people have already become infected in Britain. A bit compared to other countries. However, the infection continues to spread.
From a technical point of view, the British pound continues to adjust. The correction is very weak, more even lateral. However, for the British currency, the absence of a new fall against the US currency is already happiness. In our opinion, the pound may calmly resume falling in the coming days, as markets remain in a state of panic. And since now the main task of each trader and investors is to preserve their assets, and there is no better way than buying dollars, in the general opinion, it is the dollar that can resume growth in the coming days. As you can see, today's statistics from the UK and the United States was not the basis for the purchase of the British pound. Most likely, the pound is growing solely on technical factors.
Recommendations for short positions:
The pound/dollar pair resumed corrective movement on the 4-hour timeframe. Thus, sales of the pair with the goal of the first support level of 1.1229 are still relevant, but only in case of a price rebound from the Kijun-sen line.
Recommendations for long positions:
Buying the GBP/USD pair is recommended only if quotes return to the area above the critical line with the first goal, the resistance level is 1.2242. However, when opening any positions, it is recommended to act as carefully as possible and remember about the increased risks.
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 indicators window.
Support / Resistance Classic Levels:
Red and gray dashed lines with price symbols.
Pivot Level:
Yellow solid line.
Volatility Support / Resistance Levels:
Gray dotted lines without price designations.
Possible price movements:
Red and green arrows.
The material has been provided by InstaForex Company - www.instaforex.com