GBP / USD. 17th of October. The trading system “Regression Channels”. Inflation in the UK may cause a reaction in the market
The senior linear regression channel: direction – up.
The younger linear regression channel: direction – up.
Moving average (20; smoothed) – up.
The currency pair GBP / USD on the eve of the EU summit is trading very restrained, being located close to its local maximums. Traders are clearly waiting for information on the course of negotiations, and we believe that the likelihood of failure of negotiations is also quite large this time. As we have repeatedly written, the “deal” on Brexit is needed more precisely by the UK and Theresa May. But it is precisely the United Kingdom that does not want to make new concessions to the European Union, which simply rejects all plans of May. Key questions on Brexit remain unresolved. In addition to the EU summit, a report on inflation in the UK will be published today, and in the evening, the minutes of the last Fed meeting. The latter, traditionally, is unlikely to provoke a reaction from traders. It rarely happens when the minutes of the Fed meeting contain some unexpected information. But inflation in the UK can cause a significant market reaction. Forecasts suggest that this indicator may accelerate in September to 2.8% y / y. As long as this indicator is around 3%, traders are unlikely to be greatly discouraged by its change of 0.1% or 0.2%. A value above 3% may cause pressure on the British pound, and the Bank of England will have to think about how to begin to contain inflation.
Nearest support levels:
S1 – 1.3123
S2 – 1.3062
S3 – 1.3000
Nearest resistance levels:
R1 – 1.3184
R2 – 1.3245
R3 – 1.3306
The currency pair GBP / USD continues to be located just above the MA and is adjusted again. Thus, it is recommended to open buy orders after turning the Heikin Ashi indicator up with the target of 1.3245. You should also carefully monitor any information from the EU summit, as it can greatly affect the movement of the pair.
Sell positions will become relevant after the price is fixed below the moving average line and, preferably, below the Murray level “7/8”. The goal, in this case, will be the level of Murray 1.3062, and the tendency for the instrument to change to a downward one.
In addition to the technical picture should also take into account the fundamental data and the time of their release.
Explanations for illustrations:
The senior linear regression channel is the blue lines of unidirectional movement.
The junior linear channel is the purple lines of unidirectional movement.
CCI is the blue line in the indicator regression window.
The moving average (20; smoothed) is the blue line on the price chart.
Murray levels – multi-colored horizontal stripes.
Heikin Ashi is an indicator that colors bars in blue or purple.