GBP/USD 5M
The GBP/USD pair was very active on July 9. It was so active that it is quite interesting to know what exactly provoked such market activity. Last Friday, the UK was scheduled to publish a report on GDP, industrial production, as well as a speech by the Governor of the Bank of England Andrew Bailey. All the reports from Britain turned out to be disappointing. Accordingly, it should have provoked a fall in the British currency and the pound/dollar pair. But instead, we saw growth. The chart clearly shows that after the reports were published, the markets did not even really want to react to sufficiently important data (figure "1"). Bailey's speech (figure "2") also did not provoke any significant changes - by that time the growth of the British currency had already begun. Thus, in our fundamental articles, we made the assumption that the global correction of the euro and the pound is over, so now both European currencies may return to their three-year highs. Now for the trading positions and signals last Friday. Several signals were generated during the day, but not all of them were correct. The first was formed when the pound surpassed the 1.3800 extremum level, but since the Kijun-sen line was located nearby, it was necessary to wait for confirmation of a buy signal in the form of a breakthrough of the critical line as well. When this happened, traders could enter long positions. The next two targets were reached easily and quickly - the level of 1.3859 and the Senkou Span B line - but here a little misfortune happened, as the pound quotes fell by 50 points in just 5 minutes. In principle, traders could behave differently here, since many might not even have time to react to this fall. However, if you look closely, a little earlier the price had already bounced off the level of 1.3859, so it was necessary to manually close long positions with a profit of about 25 points. Short positions should have been opened immediately upon a rebound signal from 1.3859. But then traders could not have time to close the shorts at a loss, since the price almost immediately went above the Senkou Span B line. In this case, they were lucky, as the quotes began a strong and rapid fall. If the traders managed to close the short position, they got about 15 points of loss. After the price fell by 50 points, trades should not have been opened, since the market was about to close.
Overview of the EUR/USD pair. July, 12. Inflationary week. The dollar is tired of growing, which the European currencies can use.
Overview of the GBP/USD pair. July, 12. Crazy pound or the bears couldn't stand it and gave up.
GBP/USD 1H
There is still no trend line or channel on the hourly timeframe. Since the price has overcome the previous local high, there are certain hopes that the upward movement will continue. However, the pound's sharp growth on Friday raises big questions. Will the same decline begin today? In general, the pound is still the most confusing currency pair at this time. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3800, 1.3859, 1.3898 and 1.4000. Senkou Span B (1.3865) and Kijun-sen (1.3820) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. There are no major events or reports scheduled for Monday in the UK and US. However, the markets may continue to trade the pair very actively, as there is little (local) logic in the pound's movement right now.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 50 points during the last reporting week (June 22-28). However, there is still a feeling that the current decline in the pound is a temporary phenomenon. The Commitment of Traders (COT) report showed different pictures at different times, but the pound still continues to grow in the long term. A group of non-commercial traders closed 35 buy contracts (longs) and opened 454 sell contracts (shorts) during the reporting week. Thus, the net position decreased by 420 contracts. But seriously, you shouldn't even pay attention to these changes, since they are minimal. Nevertheless, the mood of professional traders is still bullish, as the total number of open buy contracts in the Non-commercial group remains 1.5 times greater than the number of sell contracts. Although professional traders for the pound did not buy the British currency at breakneck speed in the last year, nevertheless, the pound has been growing all this time. The first indicator shows that the net position of non-commercial traders (green line) has been falling in recent weeks, but this decline pattern is fundamentally different from a similar line for the euro. If there was a clear trend for the euro and the actions of large players were indeed reflected in the COT charts, then in the case of the pound, the data that reflect the actions of non-commercial traders is very chaotic and does not fit well with how the British currency has been moving in the last year. Actually, the indicators do not even show that the pound was actively bought, although the British currency has sharply grown over the past year and a half. Thus, once again it should be remembered that the pound may rise simply because the money supply in the United States has inflated and continues to swell. Consequently, the dollar depreciates, and as a result, the pound's rate rises.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the non-commercial group.
