GBP/USD 5M
The GBP/USD pair was trading quite actively on Thursday and even formed several signals that could and should have been worked out. Overall, the pound remained close to its 3-year highs, so the overall technical picture has not changed at all. It is also difficult to say what caused the sufficiently sharp strengthening of the British currency, although we are already used to the pound's unjustified growth over the past eight months. The main thing is that the signals were formed, which should be worked out. Let's start in order. First, there was a top-down intersection of the Senkou Span B line - a sell signal. There was no need to rush to open short positions here, as the extreme level of 1.4101 is just below, from which the price could rebound. And so it turned out. The price bounced off it and it was a buy signal, which should also not be worked out in a hurry, since there was a Senkou Span B line nearby, but when the pair overcame this line, it was finally necessary to open long positions. Subsequently, the quotes rose by around 40 points and reached the nearest target line - Kijun-sen. This line was immediately crossed, so long positions should continue to be kept open. But the upward movement did not continue, and the price settled below the critical line, so it was necessary to close longs here, profit worth 35 points. Also, a sell signal was immediately formed here, which should have been worked out, but it turned out to be false, since after surpassing the critical line, the downward movement did not continue, and the price settled in the area above the Kijun-sen line. As a result, there was a loss worth 20 points. All subsequent signals from the Kijun-sen line should be filtered out, since two false signals had already formed near it. As a result, for yesterday, the pound/dollar pair managed to earn 15 points of profit. No important report published in the UK. The US reports on GDP and orders for long-term goods did not cause any reaction from market participants.
Overview of the EUR/USD pair. May 28. Walking through the throes of the US dollar.
Overview of the GBP/USD pair. May 28. Dominic Cummings has acknowledged the mistakes of the UK government during the pandemic.
GBP/USD 1H
The British pound fell into the side channel of 1.4100-1.4220 on the hourly timeframe and remained in it for the whole day on Thursday, bouncing off its lower border. And so, in general, the pair continues to "swing" in the horizontal channel, because this is not a classic flat. Therefore, a new round of downward movement may begin today, although all this time the pair retains excellent chances of resuming the upward trend. We continue to draw your attention to the most important levels, of which there are very few at the moment, and trade from them: 1.4080, 1.4101, 1.4219 and 1.4240. The Senkou Span B (1.4118) and Kijun-sen (1.4161) lines can also be sources of signals, but they are very weak in the flat. And now it seems that there is a kind of flat. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction of 20 points. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching for trading signals. The calendar of macroeconomic events in the UK is empty again on Friday, and only insignificant data will be published in the US. Therefore, we do not expect the market to react to these reports, however, the volatility may remain quite high, as it was yesterday.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 10 points during the last reporting week (May 11-17). In general, the pound continues to rise in price, which can clearly be seen in the chart above. Major players have resumed building up long positions since about December 2020. But at the same time, even according to Commitment of Traders (COT) reports, third-party global factors are clearly visible, which also support the pound. See for yourself. Until last December, when the upward trend in the pound continued, commercial and non-commercial traders did not really even know what to do with the pound. At that time, we recall, it was completely unclear how Brexit would end up and whether there would be a trade deal, and what awaits the UK in general. The red and green lines of the first indicator constantly crossed, which indicates the absence of a trend. But the pound was still growing. Therefore, even from this point of view, there is a serious imbalance in the money supply of Britain and the United States. Otherwise, the picture is as follows: neither the big players, nor the small ones bought the pound, but it grew anyway. It doesn't work that way. If market participants did not buy the pound, then it could grow only due to non-market factors, in particular, the intervention of the Federal Reserve and the Bank of England. Now the COT reports show that professional traders have started to buy the pound again, but they are not doing it very zealously. Rather, they try to simply follow the trend that is being formed without their much involvement. For example, a group of non-commercial traders closed 3,800 Buy contracts (longs) and 1,500 Sell contracts (shorts) during the reporting week. Thus, the net position for this group has decreased, which means that the bullish sentiment is weakening. It is this indication, not that the bearish mood has strengthened. The bears continue to rest now.
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.
