4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - sideways.
CCI: -81.1651
The British pound paired with the US dollar is trading very weakly and reluctantly at the beginning of the new week. Formally, the pair completed the fixation under the moving average line. However, in fact, over the past few days, there have already been 5 such fixations. Thus, it is the pound/dollar pair that is closest now to a flat movement over the next few days. The pair is currently between the levels of 1.2410 and 1.2510. This results in a side-channel with a width of 100 points, which is not a high value. On the first trading day of the week, there were no macroeconomic statistics in the UK and the United States. However, market participants continue to ignore 99% of news and reports. Thus, now traders are offered either to trade between the upper and lower border of the side channel or to resume opening positions only after the pair's quotes exit from this channel.
Meanwhile, the issue of opening the country's economic borders and ending the quarantine continues to persist in the United States, despite the fact that the epidemic has not yet been defeated and that the United States is now leading the world in terms of the number of deaths from the epidemic and the number of cases. However, as we have repeatedly written, for Donald Trump, the coming months may be crucial in the fight for the presidential seat in the 2020 elections. We have already said that the main trump cards were leveled by the "coronavirus" epidemic: the unemployment rate is growing and may rise to 50-year highs, the labor market is in a deplorable state, and the economy is in a severe recession. In general, the crisis is already being compared to the Great Depression. So, as part of the election campaign, Donald Trump will need to answer the question, why should Americans elect him President for the second time in a row? If earlier Trump could say that it was under him that the United States showed significant economic growth, and the unemployment rate fell to 50-year lows, now the President can not say anything like that. And so it will be much more difficult for him to win the presidential race since Joe Biden will only have to make beautiful promises to the Americans. Thus, Trump's desire to restart the US economy as soon as possible is obvious. And, according to official information, the US President is supported in this desire by at least 15 states of the country, which last week held rallies against the current quarantine measures. During these rallies, the protesters wore no masks, did not observe the rules of social distance, and demanded to be allowed to return to work as soon as possible. State governors were also criticized, and the threat of "coronavirus" was questioned. The reaction of Donald Trump, who initially supported the removal of the "lockdown", did not have to wait too long. The US President called the protesters "wonderful people" and said that "people just want their lives back." "Their lives were taken from them. I have never seen so many American flags as at these rallies. These people love our country. They want to get back to work," Trump said. At the same time, official information suggests that the number of people at these rallies was extremely small. Only a few thousand people don't work. Thus, the majority of the US population, we can conclude, still does not support any removal of "lockdowns" to the detriment of their own health and life. The economy is certainly important, but life is more expensive. Moreover, any rally can be organized by those who will benefit from it. In this situation, Donald Trump himself. Of course, there are always people who are ready to stand on a square and shout slogans prepared in advance for a few 100-dollar bills. It should be understood that it is Trump who needs to return the country's economy to its usual course. It is against Trump that time is playing now.
The US President also seems to be preparing to impose new duties and trade restrictions on China, accusing it of deliberately spreading a "coronavirus" infection. The US leader wants to send his investigators and experts to the province of Wuhan, who will have to figure out whether the virus accidentally broke free from a Chinese laboratory? It is clear that China rejects all official requests, which gives Trump reason to assume that "the case is not clean." Knowing the American President, it is unlikely that he will leave this story aside. Trump urgently needs to find the culprits before this year's election. China and the WHO are excellent candidates for these positions. WHO has already "incurred the penalty" of refusing to fund the organization by the United States. Now it's China's turn.
Meanwhile, the total number of infected people in the UK reached 126,000. The number of "fatal cases" is 16,500. At the same time, British Newspapers continue to criticize Boris Johnson for responding too late to the epidemic and taking too lenient quarantine measures. According to newspaper reports, the UK lost as much as 5 weeks at the very beginning of the outbreak. As a result, the country was completely unprepared for the epidemic. Many newspapers were able to interview doctors and scientists who said that in early February, the government did not do anything in case the pandemic reached the Foggy Albion. At that time, it was already known that the virus was transmitted from person to person, and a total quarantine was declared in Hubei province. The British authorities assured that the country is ready for any kind of emergency, but, as it turned out in practice, many stocks of protective equipment for doctors have not been replenished for many years, many of them have expired. It is also reported that the quarantine was proposed to be introduced in early February, when it became known about the high degree of infection of the COVID-2019 virus, but it was introduced only on March 23.
On Tuesday, the UK is scheduled to publish the unemployment rate (for February), the number of applications for unemployment benefits (for March) and changes in average wages (for March). We believe that only the number of applications for benefits is important. But even this can be ignored by traders. No important information is expected from overseas today.
The average volatility of the GBP/USD pair has stopped decreasing and is currently 132 points. In the last 18 trading days, the pair almost every day passes from 100 to 200 points. Therefore, we can say that volatility is now stable. On Tuesday, April 21, we expect movement within the channel, limited by the levels of 1.2319 and 1.2583. A reversal of the Heiken Ashi indicator upwards will indicate a new round of upward movement inside the side channel of 1.2410-1.2510.
Nearest support levels:
S1 - 1.2451
S2 - 1.2390
S3 - 1.2329
Nearest resistance levels:
R1 - 1.2512
R2 - 1.2573
R3 - 1.2634
Trading recommendations:
The GBP/USD pair on the 4-hour timeframe is currently trading just below the moving average line. Thus, formally, short positions with the targets of 1.2390 and 1.2329 are now relevant. However, we recommend that traders wait until the end of the flat, that is, the pair's quotes exit from the range of 1.2410-1.2510, and only then resume trading.
The material has been provided by InstaForex Company - www.instaforex.com