GBP/USD 5M

The GBP/USD currency pair continued its upward movement on Monday as if nothing had happened. Despite the fact that there were practically no important macroeconomic statistics or "foundation" on the first trading day of the week, and the euro continued to remain inside the horizontal channel all day, the pound still found grounds for new growth. Of course, we can single out business activity indices in the UK and US manufacturing sectors, but in Britain it turned out to be lower than forecasts (the pound was growing at that time), in the US it was better than forecasts (the dollar was falling at that time). Thus, it cannot be said that the market has somehow reacted to such data. We stick with our opinion: the current growth of the pound is directly related to the upcoming meeting of the Bank of England, at which the rate will be raised by 0.5% with a 90% probability. This rate hike can have a beneficial effect on the pound. However, such a "fairy tale" cannot last forever, especially given the growing geopolitical tension in the world. Either way, the Federal Reserve is raising rates harder and faster, so the dollar has a lot more reason to rise than the pound. However, for now, the rising trend line clearly makes it clear what the current trend is for the pair.

Three trading signals were formed during the past day. The first one was for longs and was the strongest and most profitable. The price rebounded from the level of 1.2185 and managed to grow to the next extreme level of 1.2259, from which it rebounded safely. Traders could earn about 50 points on this deal. The signal to sell from the level of 1.2259 turned out to be false, but the price managed to go down 30 points, so Stop Loss had to be placed and the loss did not happen. Then the pair overcame the level of 1.2259, but this signal also turned out to be false. The long position should have been closed manually in the late afternoon and, most likely, it is in zero profit.

COT report:

The latest Commitment of Traders (COT) report again showed insignificant changes. During the week, the non-commercial group opened 2,600 long positions and closed 600 shorts. Thus, the net position of non-commercial traders increased by 3,200. But what does it matter if the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above? To be fair, in recent months, the net position of the non-commercial group is still growing and the pound also shows some tendency to rise. However, both the growth of the net position and the pound are now very weak (in global terms), so it is still difficult to conclude that this is the beginning of a new upward trend, and the pound will no longer fall. We also said that the COT reports do not take into account the demand for the dollar, which is likely to remain very high right now. Therefore, in order to strengthen the British currency, the demand for it should grow faster and stronger than the demand for the dollar. The non-commercial group currently has a total of 89,000 shorts open and only 34,000 longs. The net position will have to show growth for a long time to at least equalize these figures. Theoretical support can be provided to the pound by the Bank of England and the technical need to be corrected from time to time. There is nothing more for the pound to count on now.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. August 2. The geopolitical situation in Kosovo and Taiwan is escalating.

Overview of the GBP/USD pair. August 2. The pound continues to rise in anticipation of the meeting of the Bank of England in order to then fall?

Forecast and trading signals for EUR/USD on August 2. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pair maintains an upward trend on the hourly timeframe and is ready to continue growing. However, we once again warn that the closer the BoE meeting is, the higher the likelihood that the fall of the British currency will begin. A trend change can be identified by the price consolidating below the trend line. The pound has already more than worked out the future rate hike. We highlight the following important levels for August 2: 1.1974, 1.2033, 1.2106, 1.2185, 1.2259, 1.2342, 1.2429. The Senkou Span B (1.1923) and Kijun-sen (1.2139) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" 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. No major events are scheduled for Tuesday in the UK or the US. Thus, there will be nothing for traders to react to, but the pair is clearly not waiting for macroeconomic statistics now in order to move actively.

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.