Major linear regression channel: direction – sideways.
The lowest linear regression channel: direction – up.
Moving average (20; smoothed) – sideways.
The British pound sterling continues to move within the swing mode. Over the weekend, we assumed that neither the trend line on the hourly timeframe, nor the increase in the pound / dollar quotes in recent days will help the British currency to continue its growth, which is absolutely illogical from a fundamental point of view, but expected from a technical point of view. With regard to the pound sterling, everything is now so complicated that it seems that the participants of the foreign exchange market themselves do not understand what to do with this currency, and what other traders are doing with this currency? The pound sterling fell on the first trading day of the week. It fell as well as the European currency. But the European currency fell in a continuing uptrend that has been going on for three weeks, and the pound sterling fell in a new round of the swing-down. Let us remind you that in the last few months, and with a closer examination, in the last 7-8 months it is very often traded in “swing”. That is, 300 points up – 250 down – 280 up – 320 down. All this leads either to the absence of a trend movement (but not to a flat !!!!), or to a trend movement, but with constant corrections and pullbacks. It is very, very difficult to work out such movements on a 4-hour timeframe. Thus, the technical picture is now ambiguous if you look at the 4-hour timeframe. If you look at the daily timeframe, on the contrary, everything becomes clear. The upward trend continues for the pound sterling, and it is much stronger than for the euro, and the last correction within this trend is much weaker than for the euro. Thus, it is the pound sterling that has a much better chance of resuming growth in 2021. But in the case of the pound / dollar pair, everything will no longer depend on the trillions of stimulus packages in the US, but also on the speculative factor, which clearly helped the British currencies climb so high and stay so high while the fundamental background from the UK wants to close your eyes and forget him as soon as possible. If we compare the state of the EU and the UK, then it is obvious that in Britain everything is much worse. This is if anyone wants to make a correlation between the growth of the euro and the pound in the last year. The European Union has lost only one country out of 27, and Britain has lost its 400 millionth market. Great Britain in the coming years may lose at least Scotland and get a new bloody conflict on the island of Ireland. And before starting to recover, the British economy contracted by 20%, and the European – by 11% (data from the second quarter of last year). Thus, the high rates of vaccination in the UK are not that irrelevant now, they play a very indirect role. Recall that when in epidemiological terms in Britain everything was much worse than in the European Union, the pound sterling also grew. Thus, “the pound is growing due to the high rates of vaccination of the population” – this is not an explanation of what is happening at all. For what other reasons can the pound grow, or more precisely, at this time “not to fall”? Only for the same as the European currency. All the same trillions of dollars that are pouring into the American economy, increasing the supply of the dollar in all markets. But at the same time, if we remove the “speculative factor”, then the pound sterling may show a local fall, as the euro currency showed at the beginning of the year. That is, everything now depends on the traders themselves. If the blind faith in the growth of the pound remains, then the pound itself has a great chance of continuing to grow in 2021. If traders slowly begin to close longs, then the pound sterling may still rise in price in 2021, but on a smaller scale. All other fundamental events and reasons are just an attempt to explain what is happening to the British currency at this time. Many traders and experts are now frantically trying to explain why the pound sterling rose by 28 cents in the last “Brexit” year, while it fell by about the same amount over the previous three “pre-Brexit years”? And they all try to find a black cat in a dark room. The state of the economy, the epidemiological situation, “lockdowns”, the pace of recovery, the actions of central banks, tax increases, trade wars, the profitability of American Treasuries – all this, traders perceive as the reasons for what is happening in the market, but as soon as the movement changes, they throw out one reason or another. and try to pick up a new one from a strictly limited “list”. The list of reasons is a dark room. Each individual reason is a gray cat that can be seen at least a little in the dark. But there are no black cats (real reasons) in the dark rooms of most traders and experts.
With the long-term forecast sorted out. In the short term, we believe that the swing movement will continue. At the same time, the pair can resume the downward correction, and resume the upward trend, and move sideways, but at the same time the movement of the form “300 points up – 250 down – 280 up – 320 down” will remain, from our point of view. Now, for the pound, everything is so unstable and ambiguous that it is rather difficult to imagine another scenario. By the way, the COT reports partly confirm our assumption. If you look at how the mood of professional traders has changed over the past year, then it is absolutely possible to conclude that it has changed constantly, almost every 2-3 weeks. That is, in most cases, the big players themselves did not know and did not understand what to do with the pound sterling. Therefore, we recommend trading the pound using the lowest timeframes. There, at least, small trends have time to form.
The average volatility of the GBP / USD pair is currently 80 pips per day. For the pound / dollar pair, this value is “average”. On Tuesday, April 27, therefore, we expect movement within the channel, limited by the levels of 1.3808 and 1.3968. An upward reversal of the Heiken Ashi indicator may signal a new round of upward movement within the “swing”.
Nearest support levels:
S1 – 1.3855
S2 – 1,3794
S3 – 1.3733
Nearest resistance levels:
R1 – 1.3916
R2 – 1.3977
R3 – 1,4038
The GBP / USD pair on the 4-hour timeframe has started a downward movement. Thus, today it is recommended to trade down with the target of 1.3808, if the price overcomes the moving average, before the Heiken Ashi indicator turns up. Buy orders should be opened in case the price bounces off the moving average with the target of 1.3968 and keep them open until the Heiken Ashi indicator turns down.
Overview of the EUR / USD pair. April 27. The US dollar continues to fall and is not waiting for either the Fed meeting or the GDP report.
Trading signals, report COT:
Forecast and trading signals for the EUR / USD pair for April 27.
Forecast and trading signals for the GBP / USD pair for April 27.