Analysis of GBP/USD as of November 7, 2019

Trading 07 nov 2019 Donner votre avis

Hello!

Today is a "hot day" for the British pound. At 15:00(GMT), the Bank of England will announce its decision on the interest rate, and the world will see a report on inflation and monetary policy. In conclusion, an extended press conference will be held by the head of the British Central Bank Mark Carney.

There is no doubt that these important events will cause increased volatility in all pairs with the pound, including the main pound/dollar pair.

Market expectations come down to the fact that the Bank of England will not change the parameters of its monetary policy, especially against the backdrop of uncertainty around Brexit. The campaign in the British Parliament also does not contribute to harsh statements by the regulator. In other words, the so-called "passing meeting" awaits us. In this case, the attention of market participants will be turned to the rhetoric of the head of the English Central Bank. It is reasonable to assume that in the current situation, Mark Carney will refrain from "hawkish" statements and take a wait and see attitude. Probably, the performance of the monetary official will be painted in neutral dovish tones.

If this happens, nothing good will come to sterling, and it is likely to be under selling pressure. Moreover, the forecasts for inflation and economic growth may be slightly revised downward, which will only exacerbate the pressure on the "Briton".

If you go to the charts of the GBP/USD currency pair, then, after an unsuccessful attempt to break through the psychological level of 1.3000 and gain a foothold above this important mark, the rate turned to decline.

Daily

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The two consecutive daily candles have closed below the Tenkan line of the Ichimoku indicator, and this indicates a high probability of a subsequent decline, where the nearest target will be the support zone of 1.2806-1.2788. This is where the lows of October 29 and 24 were shown, respectively.

I believe that the prospects of GBP/USD will largely depend on whether the bulls on the pound keep the price above the designated zone or the rate falls below.

In the case of a breakdown of 1.2788, we can expect a decline in the area of another fairly important mark of 1.2700. Moreover, there is a 233-exponential moving average, which may well send the pair to a corrective pullback, or even give a new upward momentum. If this happens, there is a high probability of re-testing for the breakdown of the key level of 1.3000.

Thus, the conclusion is that the bearish sentiment will strengthen after the breakdown and consolidation below 1.2788, and the bulls will cheer up and continue the rise of the price after the breakout of the resistance of 1.3013.

H4

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As seen on the 4-hour chart, it is visible that the decline in the British currency is quite limited, for example, in comparison with the euro.

We see that the pair corrected only to the area of the first pullback level of 23.6 on the stretched Fibonacci grid for the growth of 1.2195-1.3013.

At the same time, it is worth noting that the price fell below 50 MA and fixed below this moving average. In the case of continuation of the downward dynamics, another test for the breakdown of the Fibo level of 23.6, on which 89 exhibitors are located. The support zone of 1.2806-1.2788 is also a little lower, so on any other day, you could prepare for possible purchases. However, given the increased volatility on the Bank of England's monetary policy decision, as well as during Mark Carney's press conference, the risks for opening positions are considered increased.

For those who do not want to take risks and be nervous, it is better to stay out of the market. For thrill-seekers, I will try based on technical analysis to identify price benchmarks for opening deals, although today their accuracy is questionable.

So, to open the next, and therefore most risky, purchases, you can look at the price zone of 1.2838-1.2788. Even more aggressively, you can try to buy a pair from current prices. An additional signal for this decision is the last Doji candle with a lower shadow that is larger than the body itself. By its appearance, such a candle often unfolds the price, let's see how it will be this time.

Longer-term and less risky purchases are better considered with a decline in the area of 1.2700-1.2660.

The nearest sales can be searched after the growth in the price zone of 1.2875-1.2895. A little higher short positions look good from the price area of 1.2900-1.2920.

In conclusion, once again I want to remind you about important events and increased volatility, which is likely to be observed on GBP/USD.

The material has been provided by InstaForex Company - www.instaforex.com

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