GBP/USD 15M
Both linear regression channels completely turned to the downside on the 15-minute timeframe. Thus, we conclude that the downward movement prevails in the market for the short-term. The 1.3606-1.3626 area is of greatest importance now. Rebound - movement up by 100 points, to surpass - movement down by 70 points.
GBP/USD 1H
The GBP/USD pair corrected to the 1.3700 level on Tuesday and, having rebounded from it, resumed the downward movement. And by the end of the trading day, it reached the support level of 1.3619, and at the same time the 1.3606-1.3626 area. The price could not surpass this area and rebounded off it. Therefore, traders may witness another round of upward movement, back to 2.5-year highs, from which the price does not move far from. This is called a "swing". In yesterday's review, we recommended selling the pair if the price rebounds from the 1.3745 level and buy if it rebounds from the 1.3606-1.3626 area. It turns out that the signal was formed only towards Tuesday evening. A buy signal, as the pair bounced off the 1.3606-1.3626 area. Thus, long positions still remain relevant with 1.3475 as the target as long as the quotes are above the designated area. If the price settles below this area, then buy orders will have to be closed, and the downward movement will continue. The pound continues to trade according to its own rules, so you can expect anything from it.
COT report
The GBP/USD pair rose by 80 points during the last reporting week (January 19-25). 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. At the same time, it cannot be said that the mood of large traders has been stable all this time. The green and red lines of the first indicator, which graphically reflect the change in the net positions of the "non-commercial" and "commercial" groups, clearly indicate frequent changes in mood. These lines are constantly changing their direction of movement, which means that the big players themselves do not know what to do with the pound now. We also said earlier that the issue is not only about the demand for the pound, but also the demand for the dollar, which the COT report does not reflect. If, in theory, the demand for the pound falls, but the demand for the dollar falls, then this does not cause the pound to fall. We have seen approximately the same picture in recent months. Professional traders are rushing from side to side, and their mood cannot be called stable bullish, however, the pound is growing steadily and has grown by 10 cents only in the last 3-4 months. During the reporting week, commercial traders opened 2,500 new buy contracts (longs) and 6,500 sell contracts (shorts). Therefore, their net position decreased by 4,000, and the mood of non-commercial traders became more bearish. However, this still has no effect on the pound.
Tuesday was very boring for the pound/dollar pair. No major macroeconomic publications or events were scheduled. Thus, traders had nothing to react to during the day. But, as we can see, this absolutely did not prevent them from trading quite actively. The pair still cannot stand in one place if the fundamental background is absent. So, most likely, market participants relied on technical factors when making trading decisions, as we predicted in the previous review.
The UK will publish a report on business activity in the services sector, which, like the European one, is likely to remain well below the 50.0 level. According to analysts, the expected value is only 38.8.The index of business activity in the US services (ISM) will also be released, with a forecast of 56.7 and the report on the change in the number of employees in the US private sector from the ADP. According to this report, the number of employees will increase by 50,000, but a month earlier their number decreased by 123,000. The unemployment situation in America is currently ambiguous. A strong report on the value of this indicator will help the dollar rise.
We have two trading ideas for February 3:
1)The price has left the rising channel and is currently trading in the horizontal channel (1.3625-1.3745). Therefore, you are advised to trade bullish when the price surpasses the 1.3745 level, you can aim for resistance levels of 1.3768 and 1.3837. Take Profit in this case will be up to 70 points. You are also advised to open long positions when the price rebounds from the support area of 1.3606-1.3626 while aiming for 1.3700 and 1.3745.
2) Sellers tried to start a new downward trend, but they cannot overcome the 1.3606-1.3626 area. Nevertheless, in case the price rebounds from 1.3700 or 1.3745, we recommend selling the pair again with targets at the support levels of 1.3700 and 1.3635 (1.3620). Take Profit in this case will be from 50 to 100 points. The downward movement is not a trend, so if you trade, then do so 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.
