Overview of the GBP/USD pair on April 23. Preview of the week: “Empty” UK and US GDP
April 23, 2023 4:24 pm
The GBP/USD currency pair also entered a total flat last week. The pair has openly refused to move from its position in the last few trading days. It should be noted that there were few macroeconomic events in the US, and American statistics have always been of the utmost interest to the market. At the same time, quite a lot of data was published in the UK, which the market either ignored or interpreted in favor of the British currency. British statistics turned out to be weaker than forecasts and traders’ expectations. However, this did not prevent the British pound from remaining close to its local maximums. Unfairly and unjustifiably.
The moving average line now has almost no significance. Traders do not notice it. It did not signal reversals before, as there were almost no consolidations below the moving average. And after those that did occur, the decline did not begin. Therefore, trading the pair now is both easy and difficult at the same time. On the one hand, there is a clear upward trend. You need to open long positions and make a profit. But simultaneously, the pound may collapse at any moment, as the upward movement is already absolutely illogical. On the other hand, a correction is needed, but there is none. And nothing can force market participants to reduce demand for the pound slightly.
It is worth noting separately how the overall volatility has decreased over the past month. The illustration below shows that the average volatility for the last five days has been 79 points. For the pound, this is very little. In the previous 30 trading days – 97 points, but in three days, it will decrease, as three volatile days will “leave” the statistics. Thus, the movements are now illogical, and volatility is falling. Trading on a 4-hour timeframe becomes increasingly difficult.
On the 24-hour timeframe, it is still being determined whether the pair has left the sideways channel or not. Formally, consolidation above the level of 1.2440 allows for further growth, but there is no reason, and the pound is in no hurry to grow further. In general, the situation could be clearer.
There will be a few news items this week.
In the UK, the event calendar for the next week will be 100% empty. There is nothing to note, even among secondary data. Therefore, all attention will be focused on events in the US, which will also be few. What should traders, who already ignore all data in favor of the dollar, pay attention to? New home sales or unemployment benefit claims? Only on Wednesday will the first more or less significant report be released – durable goods orders, which at least have theoretical chances of causing a market reaction. However, getting a reaction now is even easier than usual. The market is in a low-volatility flat, so the reaction to each report will be visible. But who is interested in a reaction of 20–30 points? Who is interested in movement at all by 20–30 points? Therefore, in the case of a strong deviation from the forecast, this report may cause such movement, but hardly more.
The first estimate of GDP for the fourth quarter will be published on Thursday. It is forecasted that the growth rate of the American economy will decrease to 2.0-2.3% q/q. The negative trend is noticeable, but the US GDP grows faster and stronger than the EU or UK GDP. And this is although the key rate is higher in the US. The higher the rate, the more it “cools” the economy. We also expect a weak market reaction to this report.
On Friday, data on the personal income and expenses of the American population and the University of Michigan consumer sentiment index will be released. Absolutely secondary data. No speeches by representatives of the Federal Reserve or the Bank of England are scheduled. Perhaps, during the week itself, they will appear in the calendar, but so far, the week promises to be very boring. And that means volatility is unlikely to become higher. The euro and the pound may continue to move flat or near flat.
The average volatility of the GBP/USD pair for the last five trading days is 79 points. For the pound/dollar pair, this value is considered “average.” On Monday, April 24, we expect the movement within the channel to be limited by levels 1.2360 and 1.2570. A reversal of the Heiken Ashi indicator downwards will signal a possible resumption of the downward movement.
Nearest support levels:
S1 – 1.2421
S2 – 1.2390
S3 – 1.2360
Nearest resistance levels:
R1 – 1.2421
R2 – 1.2451
R3 – 1.2482
Trade recommendations:
The GBP/USD pair is trading near the moving average line on the 4-hour timeframe in a flat. You can trade either by the Heiken Ashi indicator reversals or on lower timeframes since there is no clear trend – the price is too close to the moving average and ignores it.
Explanations for the illustrations:
Linear regression channels – help determine the current trend. If both are directed in the same direction, the trend is strong.
The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which it is now advisable to trade.
Murrey levels – target levels for movements and corrections.
Volatility levels (red lines) – the probable price channel in which the pair will spend the next day, based on current volatility indicators.
The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) means that a trend reversal is approaching in the opposite direction.
The material has been provided by InstaForex Company – www.instaforex.com
The GBP/USD currency pair also entered a total flat last week. The pair has openly refused to move from its position in the last few trading days. It should be noted that there were few macroeconomic events in the US, and American statistics have always been of the utmost interest to the market. At the same time, quite a lot of data was published in the UK, which the market either ignored or interpreted in favor of the British currency. British statistics turned out to be weaker than forecasts and traders’ expectations. However, this did not prevent the British pound from remaining close to its local maximums. Unfairly and unjustifiably.
The moving average line now has almost no significance. Traders do not notice it. It did not signal reversals before, as there were almost no consolidations below the moving average. And after those that did occur, the decline did not begin. Therefore, trading the pair now is both easy and difficult at the same time. On the one hand, there is a clear upward trend. You need to open long positions and make a profit. But simultaneously, the pound may collapse at any moment, as the upward movement is already absolutely illogical. On the other hand, a correction is needed, but there is none. And nothing can force market participants to reduce demand for the pound slightly.
It is worth noting separately how the overall volatility has decreased over the past month. The illustration below shows that the average volatility for the last five days has been 79 points. For the pound, this is very little. In the previous 30 trading days – 97 points, but in three days, it will decrease, as three volatile days will “leave” the statistics. Thus, the movements are now illogical, and volatility is falling. Trading on a 4-hour timeframe becomes increasingly difficult.
On the 24-hour timeframe, it is still being determined whether the pair has left the sideways channel or not. Formally, consolidation above the level of 1.2440 allows for further growth, but there is no reason, and the pound is in no hurry to grow further. In general, the situation could be clearer.
There will be a few news items this week.
In the UK, the event calendar for the next week will be 100% empty. There is nothing to note, even among secondary data. Therefore, all attention will be focused on events in the US, which will also be few. What should traders, who already ignore all data in favor of the dollar, pay attention to? New home sales or unemployment benefit claims? Only on Wednesday will the first more or less significant report be released – durable goods orders, which at least have theoretical chances of causing a market reaction. However, getting a reaction now is even easier than usual. The market is in a low-volatility flat, so the reaction to each report will be visible. But who is interested in a reaction of 20–30 points? Who is interested in movement at all by 20–30 points? Therefore, in the case of a strong deviation from the forecast, this report may cause such movement, but hardly more.
The first estimate of GDP for the fourth quarter will be published on Thursday. It is forecasted that the growth rate of the American economy will decrease to 2.0-2.3% q/q. The negative trend is noticeable, but the US GDP grows faster and stronger than the EU or UK GDP. And this is although the key rate is higher in the US. The higher the rate, the more it “cools” the economy. We also expect a weak market reaction to this report.
On Friday, data on the personal income and expenses of the American population and the University of Michigan consumer sentiment index will be released. Absolutely secondary data. No speeches by representatives of the Federal Reserve or the Bank of England are scheduled. Perhaps, during the week itself, they will appear in the calendar, but so far, the week promises to be very boring. And that means volatility is unlikely to become higher. The euro and the pound may continue to move flat or near flat.
The average volatility of the GBP/USD pair for the last five trading days is 79 points. For the pound/dollar pair, this value is considered “average.” On Monday, April 24, we expect the movement within the channel to be limited by levels 1.2360 and 1.2570. A reversal of the Heiken Ashi indicator downwards will signal a possible resumption of the downward movement.
Nearest support levels:
S1 – 1.2421
S2 – 1.2390
S3 – 1.2360
Nearest resistance levels:
R1 – 1.2421
R2 – 1.2451
R3 – 1.2482
Trade recommendations:
The GBP/USD pair is trading near the moving average line on the 4-hour timeframe in a flat. You can trade either by the Heiken Ashi indicator reversals or on lower timeframes since there is no clear trend – the price is too close to the moving average and ignores it.
Explanations for the illustrations:
Linear regression channels – help determine the current trend. If both are directed in the same direction, the trend is strong.
The moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which it is now advisable to trade.
Murrey levels – target levels for movements and corrections.
Volatility levels (red lines) – the probable price channel in which the pair will spend the next day, based on current volatility indicators.
The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) means that a trend reversal is approaching in the opposite direction.
The material has been provided by InstaForex Company – www.instaforex.com
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