Market remains under speculators’ control. Outlook for GBP/USD on November 5

Trading 05 Nov 2020 Donner votre avis

Yesterday, market participants became shocked as during the Asian session, the market tumbled and the US dollar jumped by over 200 pinps in just a few hours. Local jumps is a usual phenomenon amid important events such as the counting of votes in the US.

Market forgot about the coronavirus, Brexit, and other problems and focused only on one topic that is the US Presidential election

Speculators are trying to make the most of the uncertainties in the results of voting. Once a report is published on a particular polling station, there are swings in the market.

The system is the following:

If Joe Biden is ahead, the dollar loses in value.

If Donald Trump is ahead, the dollar strengthens.

Speculators analyze the information flow and perform local operations, while investors wait for the results of the race and only then will make a strategic decision.

In terms of a technical analysis, there are many failures, and this is normal amid such high volatility. Fresh news is the trigger for actions, but there is still something to pay attention to.

After the collapse in the pound sterling exchange rate during the Asian session, the market switched to a slowdown mode, where the levels of 1.2930/1.3050 became variable boundaries. In fact, there was a kind of accumulation, which ended the following day.

As for the details of volatility, there is a consistent acceleration process and the quote jumped by 167 pips on November 3. Later, it increased by another 223 pips, which is 81% higher than the average level.

In turn, the coefficient of speculative operations is at the highest level.

Looking at the trading chart (daily period), you can see that the quote has been in the correction stage for at least six weeks from the local minimum of 1.2674. There a variable pivot point in the form of the area of 1.2840/1.2860/1.2885 has been found in recent weeks.

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Today, according to the macroeconomic calendar, there was a meeting of the Bank of England. The regulator decided to leave the interest rate at 0.1%, which was not surprising. The British currency was supported by the regulator's decision to increase the bond repurchase program by 130 billion pounds, bringing it to 875 billion pounds, which exceeded the forecast.

Also, today, we expect a meeting of the US Federal Reserve System. Economists do not expect any changes. The fact is that the regulator will hardly act until the end of the vote counting process.

The main reason for the speculative hikes is the presidential race.

Analyzing the current trading chart, you can see that during the European session, there was an upward movement of the price, which led to a break of the 1.3050 limit. As a result, we can see an inertial move.

A number of factors serve as a signal to open buy deals:

- Joe Biden's lead in the presidential race.

- The Bank of England's decision to buy back bonds.

- A break of the limit of 1.3050.

The weakening of the US dollar is another manipulation of speculators. It is possible that chaotic jumps will continue in the market.

Areas of trade forces interaction:

1.3100/1.3140; 1.3175 (in case of the uptrend)

1.3000; 1.2930; 1.2840/1.2885 (in case of the downtrend)

Based on the data obtained, we can make the following predictions:

It is recommended to buy the currency pair higher than 1.3140 with the target at 1.3175.

It is recommended to sell the currency pair below 1.3050 with the target at 1.3000-1.2930.

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Indicator analysis

Analyzing different sectors of timeframes (TF), we see that the indicators of technical instruments are unanimously signaling a purchase, due to the inertial upward movement during the European session, as well as the price consolidation above 1.3100. It is worth noting that high market activity may negatively affect the reliability of indicators.

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The volatility for a week / Measurement of volatility: month/quarter/year.

The measurement of volatility reflects the average daily fluctuation, calculated for a month/quarter/year.

At the moment, volatility is 177 pips, which is 44% higher than the average level. It can be assumed that speculators will continue to work amid the new flow, which will lead to subsequent jumps in the market.

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Key levels:

Resistance levels: 1.3200; 1.3300**; 1.3600; 1.3850; 1.4000***; 1.4350**.

Support levels: 1.3000***; 1.2840/1.2860/1.2885; 1.2770**; 1.2620; 1.2500; 1.2350**; 1.2250; 1.2150**; 1.2000*** (1.1957);1.1850; 1.1660; 1.1450 (1.1411).

* Periodic level

* * Range level

***Psychological level

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

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