4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - downward.
Moving average (20; smoothed) - sideways.
CCI: -56.5318
The British pound continued to trade in its favorite "swing" mode on Thursday. The pair started jumping from side to side a few days ago. Thus, at this time, the downward trend seems to be preserved. However, it is so blurry and unstable. Recall that, as in the euro case, the pound/dollar pair passed most of the way down after the last Fed meeting. After that, the "walking through the torments" began since there were very few US dollar growth factors. The global technical factor suggests that the US currency may strengthen its positions to a maximum of 1.3600-1.3666. On the hourly chart, it is impossible to form a trend line or a channel. And this situation has been maintained for the pair for quite a long time. In the last few days, the pair jumps around the moving average line, as if showing that it is not going to continue moving down. In principle, traders' hopes were dashed when Jerome Powell again stated in Congress that the Fed would not curtail the quantitative stimulus program in the near future, which continues to fuel the US economy for $ 120 billion a month. According to Powell, the US economy is recovering at a good pace. However, its full recovery is still very far away. Therefore, the US dollar does not receive additional support. And it simply does not have any other fundamental reasons for growth. Consequently, we believe that the upward trend in the pound can also resume almost at any moment. Perhaps the British pound would have already rushed up, if not for the fourth "wave" of coronavirus diseases in the UK and the country's eternal problems with Brexit.
On Wednesday, 42,000 people were infected with the coronavirus in the UK. Recall that the maximum daily number of diseases for the entire time of the pandemic was 68,000 people. If at the very beginning of the pandemic, the number of 5-10 thousand per day already shocked doctors and authorities and also threatened to collapse the entire healthcare system, then in July 2021, with 42,000 diseases per day, Boris Johnson announced the complete abolition of all quarantine restrictions from July 19. It is clear that at this time, more than 60% of the adult population of the country has received both vaccinations from COVID. According to the logic of doctors, those who have not yet received both doses of the vaccine are now infected and sick. It should also be noted that now a much smaller number of sick people have complications associated with the virus. There are much fewer hospitalizations, much fewer deaths. However, they are still there. Thus, from our point of view, the carelessness of 10 Downing Street can once again cost the UK very dearly. Recall that several deaths from COVID were detected in people who have already received both doses of the vaccine. Thus, the virus can still not be called safe, even if you are vaccinated.
Also, the British authorities continue to conflict with the European Union on almost any issue. According to the latest information, it became known that Brussels requires London to pay 47.5 billion euros for leaving the European Union. However, Boris Johnson considers this amount too high and is not going to pay it. "We do not recognize this amount. These are the EU estimates that they have made for their internal reporting purposes. In reality, the amount is much less," the British Prime Minister's administration said. The British authorities will also issue an invoice for their exit from the European Union to the European Union itself. According to preliminary estimates, London wants to receive about 33-39 billion pounds from Brussels, which is almost equal to the amount that Brussels itself intends to receive from London. It is difficult to say how true and legitimate all these figures and calculations are now. However, it is clear to everyone that London will resist almost any demand from the EU, and the EU will continue to pressure Britain, as if not forgiving it for leaving the bloc. This conflict can drag on for many years. Recall that only in 2021, many disagreements and contradictions arose between the EU and the Kingdom. The EU accuses Britain of not fulfilling the conditions of Brexit, London accuses Brussels of the ineffectiveness of the "Northern Ireland protocol" and of mistreating itself. As a result, some issues may be resolved in court. The EU countries, in particular France, have already raised the question several times that it is impossible to conclude new agreements with London since it is not able to fulfill the old ones either. Now there was a money question. And where there are financial claims against each other, it smells of sanctions, fines, and a trade war. Recall that the UK urgently needs the European market. And the European Union is not going to provide access to it to everyone who was once part of the alliance or wants to trade with it on preferential terms.
As a result, to some extent, the British pound may also be under pressure now. Although in the previous 18 months, it was rarely worried about British problems. For most of this period, the British currency continued to grow calmly, even when the fundamental background in the Foggy Albion was highly negative. However, now the markets are unable to decide what to do with the pound. Thus, the "swing" can continue, as well as illogical movements.
The average volatility of the GBP/USD pair is currently 102 points per day. For the pound/dollar pair, this value is "high." On Friday, July 16, we expect movement inside the channel, limited by the levels of 1.3721 and 1.3925. The upward reversal of the Heiken Ashi indicator signals a new round of upward movement within the "swing."
Nearest support levels:
S1 – 1.3824
S2 – 1.3794
S3 – 1.3763
Nearest resistance levels:
R1 – 1.3855
R2 – 1.3885
R3 – 1.3916
Trading recommendations:
The GBP/USD pair started moving down on the 4-hour timeframe, but in general, the pair's movement resembles a "swing." Thus, today, it is recommended to stay in sell orders with targets of 1.3794 and 1.3763 until the Heiken Ashi indicator turns up. Buy orders should be opened in the case of a reversal of the Heiken Ashi indicator up with the targets of 1.3885 and 1.3916, and keep them open until the Heiken Ashi turns down.
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