GBP/USD 5M
The GBP/USD pair continued its incomprehensible movements on Thursday. If the euro/dollar pair soared during the Federal Reserve meeting on Wednesday, and corrected on Thursday, then the pound/dollar pair soared on Wednesday, and went flat on Thursday. This is despite the fact that there was no macroeconomic background from the UK, and traders ignored the one from the US. For example, yesterday a rather important report on GDP for the first quarter was published in America, which showed that the US economy continues to recover from the pandemic and crisis at a very high rate. If there was an increase of 4.3% in the fourth quarter of 2020, then it was by 6.4% in the first quarter of 2021. And so unlike the European or British economies, the American one is doing well at this time. The US dollar did not extract any dividends from this report. If even more or less understandable movements were observed during night trading, then a flat started with the beginning of the European session. It is indicated by a large rectangle in the chart. The width of this horizontal channel is about 35 points, which is very small for the pound. The total volatility of the day is just over 40 points. It is clear that it was very difficult to make profit in such conditions. Naturally, it is not recommended to trade the pair in flat conditions. Over the past day, the pair surpassed the 1.3945 level six times and bounced off it the same number of times. There wasn't any signal that would deserve your attention.
GBP/USD 1H
The technical picture on the hourly timeframe does not require any more explanation. The previous day's flat is visible here. Formally, the pound/dollar pair began a round of downward correction, but at the same time it surpassed the rising trend line earlier, so it is impossible to make an unambiguous conclusion that the upward trend will continue. Better to say: the trend is uncertain now. This means that you should be extremely cautious when trading the pair or you could choose to not trade it at all. Technique generates false signals, in general the situation is very unfavorable and threatens with losses. We will continue to pay attention to the most important levels and lines on Friday: 1.3886, 1.3835 and Kijun-sen (1.3904), Senkou Span B (1.3850). However, even if the quote is near them, there is no guarantee that a strong signal will be generated. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The closest level/line should always be used as targets (exceptions - if the target is too close to the signal). No important events scheduled in the UK on Friday. Meanwhile, less significant reports on changes in the level of income and expenditures of the US population will be published in America. It wouldn't be the worst decision to not enter the market with the pound/dollar pair for several days.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 200 points during the last reporting week (April 13-19). As for the Commitment of Traders (COT) report, the latest results did not show any significant changes in the balance between buy and sell contracts for the group of non-commercial traders. Non-commercial traders opened 10,500 Buy-positions (longs) and 8,200 Sell-positions (shorts) during the reporting week. Thus, their net position slightly increased by 2,300 contracts, and the sentiment became a little more bullish. However, these are not changes from which new conclusions can be drawn. In general, the upward trend remains for the pound, and this is the most important thing. As in the case of the euro, the COT reports do not indicate that the upward trend is maintained, the key influence is the fact that trillions of dollars are currently being injected into the US economy, not due to behavior of large players. If you look at the first indicator, you can see how the red and green lines often intersect, which indicates that there is no clear idea in which direction to trade the pound at all! Now the green and red lines have moved away from each other, which formally means an upward trend. Therefore, based only on the COT reports, we can also assume further upward movement. However, we have already said that it will be very difficult for the pound to grow from a purely technical point of view, since this growth is already completely unreasonable. Although even if there is another couple of trillion dollars in the US economy, the pound will still be able to continue strengthening, despite the problems with the Northern Ireland Protocol, the Scottish issue, the weak recovery and a possible drop in GDP in the first quarter, the general decline economy due to Brexit and prospects that aren't that bright.
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.
