GBP/USD – 1H.
Hello, traders! On the hourly chart, the quotes of the GBP/USD pair performed a reversal in favor of the English currency and began a new growth process. I also managed to build a new upward trend line that is not overly strong, however, it shows that traders are once again starting to change their mood to "bullish". Also, closing quotes below the trend line can be used to open sales of the British dollar. From the latest news, I note that the second wave of the coronavirus epidemic is beginning in the European Union. At least in countries such as Spain and France, several thousand diseases with the COVID-19 virus are recorded every day. In the UK, everything is still relatively quiet, however, there are still about 1000 new cases of the disease every day. Despite the high threat of a second wave of the epidemic in Britain with the arrival of autumn and especially winter, Prime Minister Boris Johnson said that it is necessary to open schools in September. This decision is dictated by economic aspects, which, of course, was not voiced by Johnson. Simply put, if children do not go to school, parents are forced to stay at home with them and can not go to work themselves, which affects the pace of recovery of the British economy. And the British economy could collapse by 20% in the second quarter, which will be officially announced tomorrow.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the British currency after the formation of a bullish divergence in the CCI indicator, however, the growth process towards the corrective level of 161.8% (1.3157) is extremely weak. Closing quotes under the low divergence will work in favor of the US dollar and resume falling in the direction of the corrective level of 127.2% (1.2964). No new divergences are currently being observed in any indicator.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed an increase to the corrective level of 100.0% (1.3199), however, the level of 161.8% on the 4-hour chart did not allow the growth process to continue. Closing the pair's rate above 100.0% will work in favor of further growth in the direction of the Fibo level of 127.2% (1.3684).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair performed an increase to the lower downward trend line. A pullback from this line may allow the pair to perform a reversal in favor of the US dollar and resume the process of falling towards the approximately 1.1500 level. This is a long-term perspective.
Overview of fundamentals:
There was no economic news in the UK or the US on Monday. Thus, the weak activity of traders is understandable.
News calendar for the US and UK:
On August 11, British traders will again have nothing to pay attention to, as the news calendars are empty in both the US and the UK.
COT (Commitments of Traders) report:
The latest COT report on the pound was again quite unexpected. Let me remind you that in the last two weeks, speculators either got rid of long contracts, or opened more short contracts. That is, according to the logic of things, the Briton should have started falling two weeks ago. However, instead, the growth of its quotes continued. A new COT report showed that a group of "Non-commercial" traders has started to re-open long contracts. However, the previous two weeks can not be deleted just like that. Despite the fact that speculators have again begun to favor the British, I still doubt its prospects. On the other hand, if the information background from America does not improve, the fall of the dollar may well resume.
Forecast for GBP/USD and recommendations to traders:
I recommend selling the pound with the goals of 1.2964 and 1.2812, if the close is made under the low divergence on the 4-hour chart and under the new trend line on the hourly chart. I recommend buying the British currency again if the quotes close above the level of 1.3157 with the goals of 1.3200 – 1.3250.
Terms:
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
