04.03.202104:06 Forex Analyse & Reviews: Forecast and trading signals for GBP/USD on March 4. COT report. Detailed analysis of yesterday's recommendations and the pair's movement during the day


Exchange Rates 04.03.2021 analysis

The GBP/USD pair traded less beautiful than the EUR/USD pair on March 3. If you immediately look at the hourly timeframe, it becomes clear that the pair spent the whole day in a side channel 60 points wide. This is also noticeable on the 5-minute timeframe, especially on the higher linear regression channel, which is directed sideways. Night trading for the pair was almost as calm as for the euro. Bears were slightly active only towards the end of the Asian session. However, with the opening of the London Stock Exchange, the bulls got down to business again and began to actively promote the pound to the upside. They managed to bring the pair to the extreme level of 1.3998 during the first half of the European trading session. And the first and only signal for the previous day was formed here. We advised you to sell the pair in case of a clear rebound from the 1.3998 level (or the Senkou Span B or Kijun-sen lines), so short positions should have been opened here. The nearest target was located quite far away - 1.3885, the bears did not have enough strength to go down 100 points. They passed only 65 (from the moment the sell signal was formed), however, this distance should have been enough for traders to earn several tens of points on this signal. Take note that 20 minutes before the sell signal was formed, business activity indices (in the service sector and composite) were published in the UK. Both turned out to be worse than the predicted values, so a succeeding decline for the pound was quite logical. The number 2 in the chart marks the beginning of the speech by UK Treasury Secretary Rishi Sunak in Parliament, during which he presented the budget for the 2021 fiscal year. Figures 3, 4 and 5 mark the publication of the ADP report on changes in the number of employees in the US private sector, the index of business activity in the US service sector and the ISM index for the non-manufacturing sector. As you can see, the US reports did not have much influence on the pair's movement. The downward movement slightly increased after the final report of the day (5), but the ISM index turned out to be weaker than forecasts, so it would be logical if traders began to buy the pair, and not continue to sell it.


Exchange Rates 04.03.2021 analysis

You can see that the pound/dollar pair rebounded off the 1.3998 level on the hourly timeframe, but at the same time could not continue moving down and has already returned back to this line. Therefore, we recommend selling the pair again in case the quote rebounds from the 1.3998 level or the Kijun-sen (1.4019) and Senkou Span B (1.4034) lines. You are also advised to sell the pair if the price settles below these lines and levels (drops below them from above). You can also sell the pair upon a rebound from the next extreme level of 1.4080. You are advised to buy the pair in case it clearly settles above the 1.3998 level or the Kijun-sen and Senkou Span B lines. The nearest target is 1.4080, the next target is 1.4145. You can open long positions in case it overcomes each important level or line from the bottom up. It is also possible to open longs on a rebound from the bottom up from 1.3998 or Senkou Span B and Kijun-sen lines. As before, when the price passes 15-20 points after opening a trade in the right direction, you should move the Stop Loss level to breakeven.

COT report

Exchange Rates 04.03.2021 analysis

The GBP/USD pair rose by 150 points during the last reporting week (February 16-22). The last two Commitment of Traders (COT) reports have clearly signaled an increase in bullish sentiment among the "non-commercial" group of traders. Therefore, in general, the mood of the major players and what was happening in the market for the pair had coincided. Non-commercial traders opened a meager number of new contracts during the last reporting week. Only 1,000 Buy-contracts (longs) and 1,200 Sell-contracts (short). Thus, the net position for this group of traders has not changed, as well as the total number of open contracts. Consequently, there shouldn't have been any major changes in the market. Nevertheless, the pound continued to sharply rise, so we return to the hypothesis that the demand for the pound remains relatively high, but the high supply of the US dollar plays a big role in strengthening the pound, which is depreciating as a result. The COT reports do not take into account supply and demand for the dollar, therefore, if they significantly change in volumes, then this or that currency may move without correlating with COT reports for it. We see approximately the same picture for the pound. The first indicator does not show an unambiguous bullish sentiment all the time that is shown in the chart. The green and red lines constantly intersect and change the direction of movement, which indicates the lack of a clear strategy among professional traders. But the pound continued to steadily grow all this time.

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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