GBP/USD 5M

The GBP/USD currency pair tried several times to continue moving up last Friday, but each time it faced a rebuff near the level of 1.2496. . Thus, the picture for the pound continues to coincide almost perfectly with the picture for the euro. Both pairs rose last week, having formal reasons for growth in the form of macroeconomic statistics. "Formal" - because the statistics were not strong enough to provoke such a strengthening of the euro and the pound. This is especially true for the euro. Nevertheless, the technique has long required an upward correction, and now it has begun. It remains only to understand how long it will last and whether this is the beginning of a new upward trend? The pound continues to be not very far from its 2-year lows, so the downward trend on the higher timeframes still remains. And this week it will be very difficult for the pound to count on the support of the foundation or macroeconomics, as there are very few reports and events planned, and even fewer important ones. Therefore, everything will depend on the mood of the traders themselves. It will be possible to see their real mood.

There were several trading signals on Friday, but none of them gave traders a tangible level of profit. The pair bounced twice at the beginning of each trading session from the extreme level of 1.2496, that is, it formed signals for short positions twice. Every time after that, it went down 20-30 points. That is, in each case, traders had to put Stop Loss at breakeven, so both trades had to close at least at zero. Profit on them could only be obtained if closed manually.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed almost no change. During the week, the non-commercial group closed 2,800 long positions and 3,200 short positions. Thus, the net position of non-commercial traders increased by only 500. The net position has been falling for three months already, which is perfectly visualized by the green line of the first indicator in the chart above. Or the histogram of the second indicator. The non-commercial group has already opened a total of 106,000 shorts and only 26,000 longs. Thus, the difference between these numbers is already more than four times. This means that the mood among professional traders is now "pronounced bearish" and this is another factor that speaks in favor of the continuation of the fall of the British currency. Note that in the pound's case, the COT report data very accurately reflects what is happening on the market: the mood of traders is "strongly bearish", and the pound has been falling against the US dollar for a very long time. We do not yet see specific signals for the end of the downward trend, however, usually a strong divergence of the red and green lines of the first indicator signals the imminent end of the trend and the beginning of a new one. Therefore, the conclusion is that an upward trend may begin in the near future, but it is dangerous to try to catch its beginning at the lowest point. The pound may well demonstrate another round of decline before it starts to grow.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. May 23. Euro hopes for a positive fundamental background. Otherwise there is little chance.

Overview of the GBP/USD pair. May 23. Indices of business activity and US GDP in the second assessment. The pound will seek further support.

Forecast and trading signals for GBP/USD on May 23. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

It is clearly seen on the hourly timeframe that the pair rose in half to the level of 1.2496 in distress last week, which it failed to overcome in three attempts. Thus, this level will play a key role in the new week. If it is overcome, then the pound can continue its strengthening. Otherwise, it could return to its 2-year lows around 1.2163 very quickly. On May 23, we highlight the following important levels: 1.2163, 1.2259, 1.2405-1.2410, 1.2496, 1.2601, 1.2674. Senkou Span B (1.2395) and Kijun-sen (1.2377) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. Bank of England Governor Andrew Bailey is scheduled to speak in the UK on Monday. Perhaps this time the head of the BoE will tell the markets something important, especially since now there are questions for him. In particular, is the central bank going to take a break in the rate increase cycle and how is it going to react to 9% inflation? There are no important events scheduled in the United States today.

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.