GBPUSD Volatility rising. Where next in light of Brexit?
One of the best forms of price discovery is to be able to have an accurate read on where the trading activity has taken place in the market by time. Quantlogic has redefined Price Discovery through the introduction of our Edge Speedos which clearly show where the market is trading over multiple time frames. In this example, we have a 60 Month Speedo with the last 12 months colour keyed. What it shows is that the 12 month high took place in March 2019 right on the East side of the longer-term bell curve. This also coincided with the 36M-W SDH1 (68%) 1.3374 as can be seen by figure 1. Barring the Brexit discussions falling out of bed we would expect this level to be hit in the near term.
Figure 2 shows the 36M QDH2 effectively the second standard deviation. This level 1.40542 is on the other side of the trading gap as can be seen above and this would be a longer-term target.
However, the bottom of the East side of the longer-term bell curve (see fig 1 @ 1.3374) could provide strong resistance prior to the price action crossing the gap. To illustrate this we have put in the 48M-W Standard deviation levels in the visual below. Fig 1 is the 48M-W SDH 1.
You can clearly see that the 48M-W SDH1 at 1.36162 is at the bottom of the East side of the longer-term bell curve. This is likely to be significant resistance before making the move higher to the 1.40 level.
Alternatively, if the market reverses we could see a rapid move back through all the consensus areas. The lowest one is at 1.22829 being the 6 month most traded price a level that it shares with other consensus time periods as you can see from the QTAP box above.