GBP/USD 5M

The GBP/USD currency pair on Tuesday also continued to trade in the horizontal channel, which is 50 points wider than the EUR/USD pair. The volatility finally decreased on Tuesday, as before when the pair had been passing 150 points almost every day. Even when there were no good reasons for this. However, the overall technical picture, for obvious reasons, does not change at this time. The pound continues to trade close to its local and 2-year lows and, just like the euro, cannot start a strong upward correction. We have been talking a lot lately about the need for upward corrections. The best way to see why it should be is on the 24-hour timeframe. There were no important events or publications on Tuesday either in the US or in the UK, so there was nothing for traders to react to.

Not a single trading signal was formed yesterday. To be honest, this is even good, because the nature of the current movement leaves much to be desired. Plus, it should be taken into account that the pair has not been at the current price values for a very long time, so there are practically no extreme levels here. The Ichimoku indicator lines will approach the price over time, giving two more levels, around which signals can form. However, Ichimoku indicator lines are weak in the flat and false signals may form around them. Therefore, traders don't have many choices. Channel border levels are rarely reached, and Ichimoku levels-lines will be of little use.

COT report:

The latest Commitment of Traders (COT) report on the British pound has witnessed a new increase in bearish sentiment among professional traders. During the week, the non-commercial group closed 6,900 long positions and 2,700 short positions. Thus, the net position of non-commercial traders decreased by another 4,000. The net position has been falling for 2.5 months already, which is perfectly visualized by the green line of the first indicator in the chart above. The non-commercial group has already opened a total of 107,000 short positions and only 33,500 long positions. Thus, the difference between these numbers is threefold. 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 data from the COT reports very accurately reflects what is happening in the market. Traders are "strongly bearish" and the pound is also falling strongly against the US dollar. Assume the end of the downward trend, we do not see any reason. COT reports, foundation, geopolitics, macroeconomics, technique, all speak in favor of the fall of the pound and the rise of the dollar. Of course, the fall of the pound/dollar pair cannot continue forever, there must be at least upward corrections, but so far, there is not a single signal about the beginning of one.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. May 11. A dead end is a dead end. International experts do not see opportunities to end the conflict between Ukraine and Russia.

Overview of the GBP/USD pair. May 11. Will the report on US inflation affect the position of the dollar?

Forecast and trading signals for GBP/USD on May 11. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

It is clearly seen on the hourly timeframe that the pound still cannot correct normally and is stuck inside the horizontal channel at 1.2259-1.2405. Now, like the euro, the pair must first leave this channel in order to talk about a new trend movement. Since the pair cannot correct, and the continuation of the fall is not obvious, we recommend focusing now on the horizontal channel and the exit signals from it. We highlight the following important levels on May 11: 1.2259, 1.2405-1.2410, 1.2601, 1.2674. Senkou Span B(1.2525) and Kijun-sen(1.2445) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" 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. There are no major events scheduled for Wednesday in the UK. But the US will publish a report on inflation, which may decrease compared to March. We believe that the market reaction to this report may follow, but again, the big question is whether the pair will be able to leave the horizontal channel.

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.