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Review of the GBP / USD pair. July, 12. Crazy pound sterling or bears gave up and gave up.


4-hour timeframe Technical data: Major linear regression channel: direction – down. The lowest linear regression channel: direction – down. Moving average (20; smoothed) – down. CCI: 162.0534 British pound sterling traded completely out of control on Friday. And that’s putting it mildly. British currency quotes began to rise in the morning and this growth continued throughout the day. Even late in the evening, when volatility traditionally falls before the market closes, purchases of the British pound continued anyway. The European currency also rose in price on Friday, but it traded, as usual, very calmly. But what caused the 150 points of growth of the British currency? It should be noted right away that we have been considering the option with the resumption of the upward movement on the 4-hour timeframe a long time ago. In recent months, we have repeatedly warned traders that global fundamentals remain on the side of the British currency, not the American one. Only the technical factor of a possible another round of correction on the 24-hour timeframe spoke in favor of the continuation of the pair’s fall, within which we expected the quotes to fall to the 1.3600 – 1.3666 area. However, it is quite possible that this round of the corrective movement ended earlier. At least, since on Friday the quotes consolidated above the moving average, this means that in the short-term plan the trend has changed to an upward one. Thus, this week we can really expect the continuation of the upward movement, especially since the macroeconomic background will be rather weak. Now let’s look at the possible reasons for such a strong growth in the pair on Friday. It should be noted right away that the growth began almost from the very beginning of the European trading session and lasted almost the entire day. What could have provoked such a sharp and strong upward movement? In the morning, the UK released data on GDP and industrial production for May. For the sake of completeness, let’s say that secondary reports on construction volumes, visible trade balance and an index of activity in the service sector were also published. And absolutely all reports turned out to be a failure. The biggest disappointment was GDP, which, according to forecasts, should have amounted to 1.5% in monthly terms, but in practice added only 0.8%. Industrial production also collapsed. So the fall of the Briton is what we should have seen on Friday. And if we add here 36 thousand new cases of the “coronavirus” on the same Friday and the very greatly reduced chances of canceling quarantine on July 19, and at least talk at the Bank of England about curtailing the quantitative incentive program, then Friday’s movement looks very strange. However, we saw an increase of 140 points after the publication of the failed statistics. Perhaps such a strong rise in the pair was associated with American statistics? It is unlikely, since the statistics themselves in the States were not published on Friday. Andrew Bailey’s speech, which began much later than the start of the growth of the British currency, could also hardly have such a strong impact on the markets, since the head of the BA simply did not say anything important. Thus, the reasons should be sought only in the technical plane or among global factors. What could have happened? We have said many times that we expect the fall of the American currency to resume. We believe that the factor of pumping the American economy with money will continue to negatively affect the dollar rate until all stimulus programs from the US government and the Fed are completed. And since the Fed is just going to start discussing in the near future the possibility of curtailing the QE program, it is hardly worth expecting that this condition will be fulfilled in the near future. But it should also be understood that if such a global and important factor takes place in the market, this still does not mean that the pair will constantly move in the same direction, even without pullbacks. Globally (on a 24-hour timeframe), corrections can take quite a long time, which we have seen for the pound in recent months. Thus, we believe that the most banal thing that could have happened happened on Friday. Most of the bears began to simply close short positions in the pound sterling, not believing that the dollar was able to continue strengthening. Earlier, we said that a pullback of both the euro and the pound sterling from their year highs and 3-year highs may be a trivial acceleration before a new powerful upward movement, within which 3-year highs will be updated. Therefore, it is possible that the movement that we have warned about in recent months has just begun. Now it only remains to understand whether this is really so. But in any case, on the 4-hour timeframe, the trend has changed to an upward one, therefore, bull trading should be considered now. From the really important reports next week, we can highlight the inflation reports in the US and the UK, as well as the unemployment rate and claims for unemployment benefits in the UK and retail sales in the US. It should be remembered that if the actual and forecast values ​​for any report coincide, traders may not react at all. It should also be remembered that any of these reports may simply be ignored by the markets. Simply because now many reports are ignored. And on Friday, a strong upward movement began, so traders (if they intend to continue pushing the pound up) may not pay any attention to the statistics for the new week. In general, we believe that, as before, more attention should be paid to technical analysis, and the macroeconomic background should be taken into account insofar as. The average volatility of the GBP / USD pair is currently 94 pips a day. For the pound / dollar pair, this value is “average”. On Monday, July 12, we therefore expect movement within the channel, limited by the levels of 1.3689 and 1.3863. An upward reversal of the Heiken Ashi indicator will signal a downward correction. Nearest support levels: S1 – 1.3885 S2 – 1.3855 S3 – 1.3824 Nearest resistance levels: R1 – 1.3916 R2 – 1.3947 R3 – 1.3977 Trading recommendations: GBP / USD pair on a 4-hour timeframe an upward movement began abruptly, which could become a new uptrend. Thus, today it is recommended to stay in buy orders with targets at 1.3947 and 1.3997 until the Heiken Ashi indicator turns down. Sell ​​orders should now be opened if the price consolidates below the moving average line, with targets at 1.3763 ​​and 1.3733, and keep them open until Heiken Ashi reverses upward. Recommended reading: Review of the EUR / USD pair. July, 12. Inflationary week. The dollar is tired of growing, which the European currencies can take advantage of. Trading signals, COT report: Forecast and trading signals for EUR / USD for July 12. Forecast and trading signals for GBP / USD for July 12. – Source: InstaForex


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