27.01.202104:50 Forex Analyse & Reviews: Forecast and trading signals for GBP/USD on January 27. COT report. Analysis of Tuesday. Recommendations for Wednesday


Exchange Rates 27.01.2021 analysis

The lower linear regression channel turned up on the 15-minute timeframe, while the higher one is still directed to the downside. Now everything depends on the 1.3745 level. A rebound from it will provoke a downward correction to the Kijun-sen line and the 1.3700 level, and maybe even lower.


Exchange Rates 27.01.2021 analysis

The GBP/USD pair continued to move down for quite some time on Tuesday. However, after the price dropped to the support area of 1.3606-1.3626, the sellers' fuse once again ended very quickly and the bulls entered the battle. As we predicted yesterday, there was a rebound from this area, which eventually led to an upward movement of almost 100 points. Both resistance levels, which we gave as targets (1.3700 and 1.3745), have been reached perfectly. Thus, traders could earn up to 90 points on this signal. Now everything will depend on overcoming or not being able to surpass the 1.3745 level. Recall that this is not just a level, but a peak for over the past 2.5 years. So rebounding off of it won't be surprising either. Moreover, the pair rebounded four times from the previous high in 2.5 years before breaking. Therefore, in case the price rebounds from the 1.3745 level, you can even try to sell the pair in small lots, but remember that the upward trend has resumed. For two reasons: a rebound from the 1.3606-1.3626 area and an update of the previous local high. In addition, we already mentioned in the fundamental analysis article that the price regularly forms false downward trends.

COT report

Exchange Rates 27.01.2021 analysis

The GBP/USD pair rose by 70 points during the last reporting week (January 12-18). It doesn't seem like a lot, but the growth is stable. But the latest Commitment of Traders (COT) report was disappointing again. Recall that over the past two to three months, the vast majority of reports indicated minimal changes. In most cases, professional traders tended to close contracts for the pound, both for buying and selling. Only the penultimate report showed that the number of buy contracts (longs) increased by 10,460 at once, which is a lot. The latest report showed that non-commercial traders have returned to their favorite pastime - a sluggish reduction in the number of contracts. 2,000 buy contracts and 3,100 sell contracts were closed. Thus, the net position for the "non-commercial" group of traders has become more bullish. However, the indicators show a completely different picture. While the numbers from the COT report could tell traders that the upward trend was maintained (and it is), the indicators show that the mood of non-commercial traders changes about once a month. The green line of the indicator (net position of the non-commercial group) constantly changes its direction of movement and intersects with the red line (net position of the commercial group), which, in fact, means that there is no trend. However, there is a trend, and the changes displayed by the COT report are minimal and do not allow any long-term conclusions to be drawn.

Several rather interesting reports were published in the UK on Tuesday. First, a report on claims for unemployment benefits, the number of which turned out to be significantly less than predicted. Second, the unemployment rate rose, but increased less than predicted. Third, wages with and without premiums rose more than projected. Thus, all three reports can be considered positive for the British pound. Of course, it is far from the fact that it was thanks to these reports that the pound grew today. Considering that the pound has been doing this constantly in recent months. However, the markets may have paid attention to this data.

No macroeconomic reports in the UK on Wednesday. Therefore, traders will have to focus on technical factors and signals. At least until the evening, when Federal Reserve Chairman Jerome Powell's press conference starts, who can provide the markets with interesting information. After all, he has never delivered a speech in 2021 yet.

We have two trading ideas for January 27:

1) The price left the upward channel, but has already managed to restore the upward trend. Therefore, you should trade bullish when the price rebounds from the critical line (1.3678) or the support area of 1.3606-1.3626 while aiming for resistance levels 1.3700 and 1.3745, which were so clearly reached yesterday. Take Profit in this case will be up to 100 points. Otherwise, you can consider new long positions once the 1.3745 level has been surpassed, which is the previous local high, and aim for 1.3776 and 1.3815.

2) Sellers tried to start a new downward trend, but could not surpass the 1.3606-1.3626 area. Thus, you can consider sell positions when the price rebounds from the 1.3745 level while aiming for the Kijun-sen line (1.3678) and the 1.3635 level. Take Profit in this case will be up to 100 points. A downward movement is not a trend, so if you trade, then in small lots.

Forecast and trading signals for EUR/USD

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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