5M chart of GBP/USD

On Thursday, the GBP/USD pair was absolutely flat and volatility was low. The services PMI was quite peculiar for the British currency. The report exceeded forecasts, but the pound neither grew nor fell because of it. Traders were also not interested in the European Central Bank meeting, although there was every reason to expect a high correlation between the euro and the pound. Thus, the pair had an absolutely boring day during the height of a very important week. However, in the evening, the quotes of the British currency sharply transitioned to growth for no reason. Illogical and unreasonable movements persist, and the market still seeks and uses any opportunity to buy the pair.

During the past day, only two trading signals were formed. Both were rebounds from the 1.2589 level. In both cases, the pair found it difficult to move in the right direction by 20 points, so it was possible to set a Stop Loss at breakeven for both short positions. Considering the flat, we can consider this outcome as favorable. The pound continues to ignore the general fundamental background and keeps growing despite its overbought status. Inertial movement can continue indefinitely. Today's macro data releases may also push the pound to rise, even if it turns out to be strong and in favor of the US currency.

COT report:

According to the latest COT report on the British pound, the non-commercial group of traders opened 5,600 long positions and 1,000 shorts. As a result, the net position of the non-commercial group traders has increased by 4,600 and continues to grow. The net position has been steadily rising for the past 8-9 months, but the sentiment of major market players remained bearish during this time. Now it can be called bullish to some extent. Although the British pound is strengthening against the US dollar in the medium term, it is hard to explain this behavior from the fundamental point of view. There is still the possibility of a sharp decline in the pound. Both major pairs are moving in a similar way now, but the net position of the euro is positive and even implies the imminent completion of the upward momentum, while for the pound, it still suggests further growth. The British currency has already risen by more than 2,100 points, which is a lot, and without a strong bearish correction, the continuation of growth would be absolutely illogical. The non-commercial group of traders currently has a total of 53,500 shorts and 59,500 longs. I remain skeptical about the long-term growth of the British currency and expect it to decline.

1H chart of GBP/USD

On the one-hour chart, the GBP/USD pair continues to ride on "swings" with a slight upward slope. The pound still could not show a significant drop after overcoming another ascending trendline. At this time, you can form the fourth ascending trendline, which doesn't mean anything since overcoming these lines still doesn't lead to a fall. In the short term, the pair continues to alternate between downward and upward spirals, ignoring all incoming information.

For May 5, we highlight the following important levels: 1.2349, 1.2429-1.2458, 1.2520, 1.2589, 1.2659, 1.2762. Senkou Span B (1.2474) and Kijun-sen (1.2523) lines can also generate signals. Rebounds and breakouts from these lines can also serve as trading signals. It is better to set the Stop Loss at breakeven as soon as the price moves by 20 pips in the right direction. The lines of the Ichimoku indicator can change their position throughout the day which is worth keeping in mind when looking for trading signals. On the chart, you can also see support and resistance levels where you can take profit.

On Friday, the UK will only publish its construction PMI, while in the US, important labor market and unemployment reports will be released. Forecasts suggest a possible slowdown in the pace of job creation outside the agricultural sector, and unemployment may rise again. Given the current nature of the pair's movement, this may be enough for the pound to grow again, and the dollar to fall again. If the data turn out to be strong, the US currency may show growth, but unlikely to be strong.

Indicators on charts:

Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals.

Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines.

Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals.

Yellow lines are trend lines, trend channels, and any other technical patterns.

Indicator 1 on the COT chart is the size of the net position of each trader category.

Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.