GBP/USD – 1H.
Hello, traders! According to the hourly chart, yesterday's movement of the pair passed as "according to the textbook". The pound/dollar pair performed growth to the upper line of the side corridor and fall to the corrective level of 323.6% (1.1665). It rebounded from this level, then turn in favor of the British pound and return to the Fibo level of 261.8% (1.1958), which almost coincides with the upper line of the corridor. Thus, a new rebound of quotes on March 26 from this level will again work in favor of the US currency and the beginning of a fall in the direction of the level of 323.6% and the lower line of the side corridor. Closing the pair's rate above the side corridor will significantly increase the probability of further growth towards the next corrective level of 200.0% (1.2251).
GBP/USD – 4H.
According to the 4-hour chart, I built a new grid of Fibo levels in case the downward trend is complete. Thus, at the moment, the quotes of the GBP/USD pair have made a consolidation above the Fibo level of 23.6% (1.1834), which allows traders to expect continued growth in the direction of the next corrective level of 38.2% (1.2095). There are no pending divergences on this chart today for any indicator.
GBP/USD – Daily.
On the daily chart, the picture remains the most interesting. The GBP/USD pair rebounded from the corrective level of 127.2% (1.1538), but it is unclear and inaccurate. Nevertheless, it performed a reversal in favor of the British currency and increased to the corrective level of 100.0% (1.1959). The US dollar, as in the case of the euro, remains under little pressure from traders, as the Fed and the US government pour huge amounts into the economy to save and stimulate it. Yesterday, the US Senate passed a decision to provide 2 trillion in aid to American citizens, small businesses and airlines that have been affected the most by the COVID-2019 virus epidemic. Also, the number of diseases in America continues to grow and in 2-3 days may overtake Italy and China. These factors do not work in favor of the US currency. The rebound of quotes from the level of 100.0% will work in favor of the US currency, but the information background allows us to count on continued growth.
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed a fall to the lower line of the "narrowing triangle", but the breakdown may be false. So far, it is difficult to say what exactly happened near the lower line of the triangle, but if the growth process continues, the breakdown will be considered false. A false breakout will give a high probability of growth to the first downward trend line.
Overview of fundamentals:
On Wednesday, the UK released a report on inflation in February. This report showed a slight change in inflation towards a slowdown but did not arouse any interest among traders. In America, a report on changes in the volume of orders for durable goods was released, which also did not interest traders.
The economic calendar for the US and the UK:
United Kingdom - change in retail trade volume (09:00 GMT).
United States - number of initial applications for unemployment benefits (14:30 GMT).
Today, only the report on applications for unemployment benefits can attract the attention of traders, as it can jump up sharply and amount to more than a million new applications. The worse the report, the more likely it is that the US currency will continue to fall.
COT report (Commitments of Traders):
The latest COT report showed no major changes in the number of contracts between speculators and hedge companies. The total number of long and short contracts has decreased slightly but remains almost equal. The "Commercial" group immediately dropped 30,000 short contracts and 12,000 long contracts at once. A group of speculators increased 9,000 short-contracts. Thus, speculators believe that the pound can resume the process of falling, but there are few speculators trading the GBP/USD pair now, and they have half as many contracts in their hands as in the hands of large companies that hedge their risks in the foreign exchange market. I assume that the British pound will continue to grow against the backdrop of serious stimulus measures by the Federal Reserve and the US government, as well as the developing epidemic in America. The new COT report, which will be available tomorrow, will show whether something has changed in the total volumes of long and short contracts.
Forecast for GBP/USD and recommendations to traders:
Major players do not like the GBP/USD pair too much, preferring the EUR/USD pair. However, the COT report allows for the end of the "bearish" trend, in my opinion. I recommend buying the pound when closing quotes above the side corridor on the hourly chart with the target of 1.2251. Sell – when rebounding from the upper line of the side corridor with the targets of 1.1665 and 1.1450.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
