GBP/USD – 1H.
Hello, traders! According to the hourly chart, the pound/dollar pair performed a reversal in favor of the English currency after fixing over the downward trend corridor and began a quite strong growth. Thus, the current mood of traders is again characterized as "bullish". However, due to the fact that traders often change their mood recently, long-term graphical figures and constructions are now problematic to put on the chart of the pound/dollar pair. So I recommend paying more attention to the 4-hour chart. Yesterday, in addition to new threats from Donald Trump to China, the media also received information that the EU is allegedly ready to make certain concessions to London in the process of negotiating an agreement on the coexistence of the country and the bloc after Brexit. This information is not yet confirmed by anything, so to speak, insider information. However, if it is true, it is good news for the British. However, I believe that it is too early to be happy. It is not known what concessions Brussels is ready to make.
GBP/USD – 4H.
On the 4-hour chart, the pound/dollar pair performed a slight drop after rebounding from the corrective level of 50.0% (1.2303). However, yesterday, it resumed the growth of quotes and performed a consolidation above the level of 50.0%. Thus, the growth can be continued on May 27 in the direction of the next corrective level of 61.8% (1.2516). However, closing the pair's exchange rate under the Fibo level of 50.0% will again work in favor of the US currency and allow traders to count on a slight fall in the direction of the corrective level of 38.2% (1.2095). No indicator has any pending divergences today.
GBP/USD – Daily.
On the daily chart, the pair's quotes increased to the corrective level of 23.6% (1.2355) and at the moment, everything looks as if a rebound from this level will be performed. Thus, the daily chart speaks in favor of a new drop in the British dollar's quotes in the direction of the corrective level of 38.2% (1.2174).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair's quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.
Overview of fundamentals:
No economic reports were released in the UK and the US on Tuesday. Thus, the information background was empty on May 26. However, the activity of traders was quite high.
News calendar for the US and UK:
On May 27, the calendars of economic events in the UK and the US are again empty, so the information background for the pound/dollar pair will be empty for the third day in a row.
COT (Commitments of Traders) report:
The latest COT report showed a sharp increase in the activity of major market players. The total number of open new contracts for the week up to May 19 was more than 25 thousand. The pound has been in demand over the past week, so we can even assume that the major players have moderated their "bearish" mood a little this week. In the new COT report, we can see a bigger increase in long contracts than short. In any case, the growth of the British pound is still limited to the level of 23.6%-1.2355 on the daily chart. Thus, the "bearish" mood of major market players may increase at any moment, and the British pound may resume its decline.
Forecast for GBP/USD and recommendations to traders:
I recommend making new sales of the pound in the current conditions with the goal of 1.2174 since the corrective level of 23.6% (1.2355) is highly likely to be rebound. I recommend buying the English currency after fixing the pair above the level of 1.2355 with the goal of 1.2646.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
