28.10.202003:38 Forex Analyse & Reviews: Hot forecast and trading signals for GBP/USD on October 28. COT report. Traders waiting for information on the progress of trade deal talks

GBP/USD 1H

Exchange Rates 28.10.2020 analysis

The GBP/USD pair also traded mostly sideways on Tuesday, October 27, between the Senkou Span B and Kijun-sen lines. Therefore, the technical picture for this pair has practically not changed. The only thing that you should take note of is that the pair left the descending channel, which appeared recently, showing the bears' weakness at this time. Traders of the pound/dollar pair are also frankly cautious at this time and do not regret trading more or less actively. Volatility was only about 80 points yesterday, which is not very little, but not much as well. Therefore, buyers need to overcome the critical line in order to bring the pair back to the rising channel and be able to take it back to the resistance area of 1.3160-1.3184. After several attempts, sellers failed to overcome the support area of 1.3004 - 1.3024, so their prospects look even worse now.

GBP/USD 15M

Exchange Rates 28.10.2020 analysis

The major linear regression channel is directed horizontally on the 15-minute timeframe, and the minor channel is directed upward. However, in general, the situation is approximately the same as for the EUR/USD pair - there is no trend movement.

COT report

Exchange Rates 28.10.2020 analysis

The new Commitments of Traders (COT) report for the pound showed that non-commercial traders were quite active during October 13 to 19. However, at the same time, the last few reports have completely made the situation complicated. The "non-commercial" group of traders opened 4,485 Buy-contracts (longs) and closed 4,072 Sell-contracts (shorts). Thus, the net position of professional traders immediately grew by 8,500 contracts, which is quite a lot for the pound. However, the problem is that non-commercial traders have been building up their net position (strengthening the bullish sentiment) over the past few weeks, and before that they have reduced their net position for several weeks (strengthening the bearish sentiment). Thus, over the past months, professional players have not even been able to decide in which direction to trade. The fundamental background continues to be very difficult and ambiguous for the pound/dollar pair, which is why the trades are so confusing. The pound sterling lost approximately 110 points during the reporting period. And the net positions of commercial and non-commercial traders are now practically zero. In other words, both the most important and largest groups of traders have approximately the same number of Buy and Sell contracts open. Naturally, such data from the COT report does not allow any conclusions, either short-term or long-term.

No important news from the UK on Tuesday. Not a single macroeconomic report was published, no speeches by Prime Minister Boris Johnson, no comments from persons associated with the negotiations on the Brexit trade deal. Therefore, traders simply had nothing to react to, and they had no desire to trade exclusively on technique. The situation is even more difficult for the pound, because in addition to the elections in the United States, which are very stressful for the markets, the situation with Brexit, the trade deal, and the prospects for the British economy remains completely incomprehensible in the UK. Thus, you need to wait for either new, important information that will force traders to make trading decisions, or the entry into the forefront of major players who will be able to move the pair from a dead center. Again, no macroeconomic report or other important event scheduled for Wednesday. All hope for at least some information about the course of negotiations between Brussels and London. It may appear unexpectedly, and is also impossible to predict. One should trade in such conditions now.

We have two trading ideas for October 28:

1) Buyers for the pound/dollar pair failed to stay above the Kijun-Sen line. Thus, long positions are no longer relevant. You are advised to re-consider options for longs in case the price settles higher. However, the pair managed to leave the descending channel, so in case the price settles above the critical line (1.3084), you may open new longs while aiming for the resistance area of 1.3160 -1.3184. Take Profit in this case will be up to 70 points.

2) Sellers took several steps towards the new downward trend, but gave up very quickly and failed to overcome the Senkou Span B line (1.3018) and the support area of 1.3004-1.3024. You may consider options for opening sell orders, but only below this area while aiming for the support level at 1.2897. Take Profit in this case can be up to 90 points. It is extremely difficult to count on more now.

Hot forecast and trading signals for the EUR/USD pair

Explanations for illustrations:

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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Uitgevoerd door Paolo Greco,
Analytische expert
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