Ichimoku cloud

  The GBP/USD currency pair exhibited no noteworthy movements on Friday. The price continues to correct both in the global and local senses. After a double rebound from the level of 1.2634, the pair is aiming for the upper boundary of the sideways channel, i.e., the level of 1.2787. This level has already been reached, so a new round of downward movement within the same channel may begin soon. Since we are currently in a range, trading the pair is inconvenient and inadvisable. While we mentioned that it's better to trade the euro on higher timeframes, in the case of the pound, trading on higher timeframes is not profitable since the pair is not showing any trend movement. Overall, the situation could be more pleasant. A consolidation above the level of 1.2787 could trigger a continuation of the upward correction, which will not break the established concept. Let us remind you that the concept involves a prolonged decline in the British currency. Corrections are integral to any trend, so a slight upward move would not hurt. However, there is still a risk of resuming an illogical and unjustified upward trend that was difficult to explain several months ago. On the 24-hour timeframe, we still do not see a breakthrough of the Ichimoku cloud, so even after the last month's decline, the upward trend has not changed to a downward one. There was virtually no macroeconomic data on Friday, and there will be none today. Volatility for the pound did not exceed 100 points last week, and any value below this level is considered "average." The pound is certainly moving more actively than the euro (which is historically the case), but the range spoils everything.   ECB rhetoric is more important than the Fed This week, there will be even fewer significant events than last week. What can we highlight? Business activity indices? The Jackson Hole symposium, which only starts on Friday? A few speeches by Fed representatives? The U.S. durable goods orders report? All of these are interesting, but what matters is the market's reaction to them. All business activity indices and the durable goods orders report could only provoke a reaction if the actual values differ significantly from the forecasts. Fed representatives' speeches – we observe quite a few of these almost every week. The Fed's policy is currently clear and understood, and it is unlikely that Bowman or Gulsbee will report anything extremely important.   The market does not believe in a rate hike in September or the end of the tightening cycle. A few months ago, Jerome Powell indicated that the regulator was shifting to a "one hike every two meetings" approach, so there should be a pause in September. However, the latest inflation report, showing an acceleration in inflation, suggests we may see at least one more rate hike. And if the August report also shows an acceleration, tightening may occur as early as September. More questions are now being posed to the ECB, for which a brief pause is also expected. If signals start coming from the ECB about even slower tightening, it may be a reason for the European currency to accelerate its decline against the dollar.     The average volatility of the GBP/USD pair over the last five trading days is 84 points. For the pound/dollar pair, this value is considered "average." Therefore, on Monday, August 21, we expect movement within the range limited by levels 1.2646 and 1.2816. A downward reversal of the Heiken Ashi indicator will signal a downward spiral within the lateral channel.   The nearest support levels: S1 – 1.2726 S2 – 1.2695 S3 – 1.2665   The nearest resistance levels: R1 – 1.2756 R2 – 1.2787 R3 – 1.2817   Trading Recommendations: The GBP/USD pair in the 4-hour timeframe has secured itself above the moving average, but we are still in a flat market overall. You can trade now based on rebounds from the upper (1.2787) or lower (1.2634) boundaries of the sideways channel, but reversals may occur without reaching them. The moving average may be crossed very often, but it does not signify a change in trend.   Explanations of illustrations: Linear regression channels - help determine the current trend. If both are directed in one direction, the trend is strong. Moving average line (settings 20.0, smoothed) - determines the short-term trend and the direction to trade now. 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. CCI indicator - its entry into the oversold area (below -250) or the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.  

EUR/USD   Higher Timeframes Bearish players slowly and cautiously broke through the daily cloud last week, reinforced by the weekly medium-term trend (1.0898), and closed the week below the encountered supports. Consolidation in the bearish zone relative to the cloud and continued decline opens new perspectives and opportunities. The nearest supports now are 1.0835–05 (monthly short-term trend + final level of the weekly cross). Further attention will be directed to the support of the monthly medium-term trend (1.0725) and the achievement of the daily target for breaking the Ichimoku cloud. A change of mood and a return to the market of bullish players will bring back the relevance of the attraction and influence of the weekly medium-term trend (1.0898), and above, the market will face resistance from the lower border of the daily cloud and the daily short-term trend (1.0954). There is a fairly wide resistance zone from levels of different timeframes above (1.0986 – 1.1001 – 1.1055 – 1.1112).     H4 – H1 As of writing, the main advantage on the lower timeframes belongs to the bearish players. However, the pair is in the correction zone, using the central pivot point (1.0871) as the current support. The next resistance is the weekly long-term trend (1.0896). This level is key and is responsible for the current balance of power. Consolidation above and a reversal of the moving average can transfer the main advantage to the bullish side. The next targets for the intraday rise will be the resistance levels of the classic pivot points (1.0920 – 1.0945). If the correction stops and the pair updates the low of the correction (1.0846), the downward trend will be restored. Targets for the continuation of the decline will be the supports of the classic pivot points (1.0822 – 1.0798). GBP/USD   Higher Timeframes Last week, the pair once again tested the weekly support (1.2629) for strength and again marked the slowdown and rebound. The daily cloud continued to support the bullish players. As a result, the pair consolidated above the daily short-term trend (1.2715) in the daily cloud. The unpassed and left-behind levels (1.2629 – 1.2597) still retain their value and continue to serve as the nearest important supports for this area. Just as the resistance zone 1.2816 – 1.2865 – 1.2893 – 1.2940 (levels of the daily Ichimoku cross + weekly short-term trend + lower border of the monthly cloud) has not changed its position and significance. H4 – H1 On the lower timeframes, there is uncertainty. The key levels today have joined forces around 1.2721–28 (central pivot point + weekly long-term trend). A prolonged stay above the key levels has allowed the bullish players to retain some advantage, thus forming a bullish target for breaking the H4 cloud (1.2798 – 1.2818). In the development of directional movement, the classic pivot points will come into play. The bullish players will benefit from resistances (1.2767 – 1.2805 – 1.2844), while the bearish players will need supports (1.2690 – 1.2651 – 1.2613).     ***   The technical analysis of the situation uses: Higher timeframes - Ichimoku Kinko Hyo (9.26.52) + Fibo Kijun levels Lower timeframes - H1 - Pivot Points (classic) + Moving Average 120 (weekly long-term trend      

The EUR/USD currency pair moved upwards and downwards over the past day. Such a movement does not surprise us, as we have repeatedly mentioned that the current move to the south is fairly weak, and corrections and pullbacks occur quite frequently. So it's not surprising that the euro initially dropped and then increased.     Overall, it continues to decline, just not very rapidly or hastily. Yesterday showed us what many had realized long ago. The European economy is just shy of sliding into a recession. For several quarters, GDP indicators have been teetering on the brink of negative values. But what can one expect when the European Central Bank regularly raises its rate? It's worth noting that the GDP is going through tough times with a not-so-high key rate, especially when compared to rates in the UK and the US, where they are much higher.   While the British economy is also struggling, the American economy is growing briskly, giving the dollar a strong advantage. We will discuss business activity indices. For now, it's worth noting that the downward trend for the pair continues, but the CCI indicator went into the oversold zone yesterday. This is a strong buying signal, so we can expect a stronger upward correction soon. Especially since, on the 24-hour timeframe, we are still looking for a confident breakthrough of the Ichimoku cloud. Thus, the pair continues its correction within the global upward trend, but the main movement can resume anytime. What are the fundamental reasons for this? There aren't any. However, it's important to remember that the forex market doesn't always move strictly with fundamentals and macroeconomics.     The European economy is sliding into the abyss. The service sector in the European Union and Germany has fallen below the "waterline." If the manufacturing sector has been in the negative business activity zone for over a year, the service sector entered it in August. Now, both sectors in Germany and the EU are below the key level of 50.0, which does not bode well for the European economy. For instance, business activity indices in the US could be in better shape but still higher than in the EU or Germany.   Hence, we can only state the obvious: US statistics continue to outperform European ones. It's worth noting that the American currency has been falling for almost a year now. This happens when the Federal Reserve's rate rises faster and stronger, and the US economy appears much more stable and confident than the European one. Recognizing this fact leads us to believe that the European currency is extremely overbought and unjustifiably expensive. Based on this, we anticipate a further decline in the European Union's currency.   This week, we are awaiting the speeches by Jerome Powell and Christine Lagarde. Although we think both officials will only provide a little significant information, the market might still grasp certain hints. Both leaders hint at a pause in September; if one doesn't, it might support their country's currency. Given the sharp decline in business activity in the European Union, we believe the likelihood of "dovish" rhetoric from Christine Lagarde is much higher. But the Federal Reserve has also adopted a "two meetings – one hike" policy, so Powell is unlikely to discuss the need for immediate tightening without seeing the August inflation report.       The average volatility of the EUR/USD currency pair over the last five trading days as of August 24 is 65 points and is characterized as "average." Therefore, we anticipate the pair to move between levels 1.0809 and 1.0939 on Thursday. A downturn in the Heiken Ashi indicator will signal a resumption of the downward movement.   Nearest support levels: S1 – 1.0803 S2 – 1.0742 S3 – 1.0681   Nearest resistance levels: R1 – 1.0864 R2 – 1.0925 R3 – 1.0986     Trading recommendations: The EUR/USD pair currently maintains a downward trend. New short positions should be considered with targets at 1.0803 and 1.0742 in case of a downward reversal in the Heiken Ashi indicator or a price rebound from the moving average. Long positions can be considered if the price consolidates above the moving average, with targets at 1.0939 and 1.0986.   Explanations for illustrations: Linear regression channels – help determine the current trend. The current trend is strong if both are directed in the same direction. Moving average line (settings 20.0, smoothed) – determines the short-term trend and the direction in which trading should proceed. Murray levels – target levels for movements and corrections. Volatility levels (red lines) – the probable price channel in which the pair will operate in the next 24 hours, based on current volatility indicators. The CCI indicator – its entry into the oversold area (below -250) or overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.