In the last few days, the pound does not consider its duty to show good trend movements at all, and if the technical picture for the euro/dollar pair looks flat, then the technique for the pound/dollar pair is very similar to the classic flat. However, the movements of both major currency pairs are very similar, so we can only conclude what we have repeatedly voiced earlier: at this time, traders prioritize factors related to the dollar, the US, and the Fed, as well as geopolitics, so the pound and the euro are trading almost identically. The technique shows that the pound, just like the euro, cannot even really adjust. Thanks to two meetings of central banks last week, it grew by an "unrealistic" 450 points, but for several days in a row, it has been hesitating and does not know how to resume the global downward trend as soon as possible. We assume that after a few more weeks of torment and ordeal and the pound will still be able to grow into the area of its last local maximum near the level of 1.2650. But even this mark now looks unattainable. Not to mention something more.
Thus, by and large, it does not matter now that Scotland can hold an independence referendum this year or the fact that the European Union and the UK will go to Court to solve the problem with the "Northern Ireland protocol". Gas and oil prices are unimportant. Now everything is connected with the American economy, the actions of the Fed, and the status of the dollar as the "reserve currency of the world". At least, the movements of both couples show that practically nothing depends on the European Union and Britain now. Therefore, globally, we believe that the downward trend will continue. There is no reason to expect that the geopolitical conflict in Eastern Europe will end in the near future and that the situation will stabilize. There is no reason to assume that the Fed will abandon its course of tightening monetary policy. This means that all the trumps remain in the hands of the dollar.
The pound is in utter despondency.
Yesterday, we already said that inflation in the UK continued to accelerate, but in general, who cares? The pound sterling first fell a little, then rose a little and remained in the same flat as before. Increasing the likelihood of further tightening of the monetary policy of the Bank of England? Once again, it did not affect the mood of traders. Thus, you can forget about British inflation for a month, and about the Bank of England – until the beginning of August, when its next meeting will take place, at which the rate will be raised for the sixth time in a row, which traders will ignore for the sixth time in a row. We want to clarify: the market can buy the pound after the regulator raises the rate, but in global terms, it does not affect anything. The downward trend, which has been maintained for 18 months, continues to persist.
At the same time, stock markets and the cryptocurrency market continue to crash, and risky assets and currencies, which include the euro and the pound, continue to fall. That is, we have a global trend when demand is growing for the safest assets. Such as bank deposits and government bonds. Of course, this is not the only way to save your capital. There are also real estate, collectibles, art objects, expensive cars, and watches. There are a lot of ways to save your money (for those who have it). However, these are not cryptocurrencies or stocks right now. And since physical money is needed to buy anything, the demand goes to those currencies that are as far away from the geopolitical conflict in Eastern Europe as possible and as independent of Ukraine and Russia as possible. Therefore, the dollar is "on the horse". The American economy may slip into recession due to the actions of the Fed, but it is not threatened by a food crisis, and the Americans will somehow cope with the energy crisis. Joe Biden has already proposed a bill according to which fuel taxes will be abolished for three months. But in the States there is fuel, there is gas and there is oil. Thus, in Europe, anyone can conflict with anyone, and the States will only make money from it. Even if we are talking about weakening its main competitors on the world chessboard.
The average volatility of the GBP/USD pair over the last 5 trading days is 126 points. For the pound/dollar pair, this value is "high". On Friday, June 24, thus, we expect movement inside the channel, limited by the levels of 1.2118 and 1.2370. A reversal of the Heiken Ashi indicator upwards will signal a new round of upward movement within the sideways.
Nearest support levels:
S1 – 1.2207
S2 – 1.2146
S3 – 1.2085
Nearest resistance levels:
R1 – 1.2268
R2 – 1.2329
R3 – 1.2390
Trading recommendations:
The GBP/USD pair on the 4-hour timeframe continues the "swing", flat, and daily overcoming of the moving average. Thus, at this time, you can trade on the reversals of the Heiken Ashi indicator. Or not to trade at all until the trend movement resumes.
Explanations of the illustrations:
Linear regression channels - help to determine the current trend. If both are directed in the same direction, then the trend is strong now.
Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction in which you should trade now.
Murray levels - target levels for movements and corrections.
Volatility levels (red lines) - the likely price channel in which the pair will spend the next day, based on current volatility indicators.CCI indicator - its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.
