Analysis of GBP/USD 5M.
The GBP/USD currency pair continued its collapse on Friday and lost about 200 points in a day. Moreover, on Friday morning, there were no special reasons for the fall of the British currency. In the afternoon, when the US inflation report became known, there were grounds. But not for the pound to fall, but for the dollar to grow. Nevertheless, traders seemed to know in advance that nothing good should be expected from American inflation, so they started buying the dollar in advance. As a result, the downward trend in the pound has resumed and now the pair may update its 2-year lows in the near future. There were no other important events on Friday in either the UK or the US.There were few trading signals on the last trading day of last week. As in the case of the euro currency, the first one was formed at the very beginning of the European session, when the price bounced off the critical line. Then the price overcame the level of 1.2458, rebounded from 1.2429, then rebounded from 1.2458, and finally overcame 1.2429. The signal between the levels of 1.2429 and 1.2458 should not have been worked out, since there was a very small distance between the levels. There were also certain difficulties with opening new deals for sale at the last signal since it was during its formation that the report on American inflation was published. However, the report was unambiguous, and the first sale deal was profitable, so it was possible to take a little risk. As a result, both short positions turned out to be profitable.
COT Report:
The latest COT report on the British pound showed insignificant changes. During the week, the Non-commercial group opened 3.8 thousand buy contracts and 0.5 thousand sell contracts. Thus, the net position of non-commercial traders increased by 3.3 thousand. However, the mood of the major players remains "pronounced bearish". And the pound, despite the growth of the net position, still resumed falling. The net position has been falling for 3 months, which is perfectly visualized by the green line of the first indicator in the illustration above or the histogram of the second indicator. Therefore, two increases in this indicator hardly unambiguously indicate the end of the downward trend in the pound. The Non-commercial group has opened a total of 105 thousand sales contracts and only 34 thousand purchase contracts. Thus, the difference between these numbers is more than three times. Note that in the case of the pound sterling, the COT reports data very accurately reflect what is happening on the market: the mood of traders is "very bearish", and the pound has been falling against the US dollar for a long time. In the last few weeks, the pound has shown growth, but even in the illustration in this paragraph (daily TF), this movement looks very weak. Since in the case of the pound, the COT report data shows the real picture of things, we note that a strong divergence of the red and green lines of the first indicator often means the end of the trend. Therefore, formally, now we can count on a new upward trend. However, weak geopolitical, fundamental, and macroeconomic backgrounds for European currencies continue to put pressure on these currencies.
Analysis of GBP/USD 1H.
In the hourly timeframe, no comments are particularly needed. The pair resumed its fall, with not just a fall, but almost a collapse. On Friday, the upward pullback did not begin, so on Monday, the pound will have a good opportunity to adjust a little. If the fall continues on an empty calendar, it will be practically a verdict for the British currency. On June 13, we highlighted the following important levels: 1.2163, 1.2259, 1.2429, 1.2458, and 1.2589. The Senkou Span B (1.2548) and Kijun-sen (1.2450) lines can also be signal sources. Signals can be "bounces" and "surmounts" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. Also in the illustration, there are support and resistance levels that can be used to fix profits on transactions. There are no interesting events scheduled for Friday in the UK and the USA. All the most interesting things (at least two central meetings will take place later in the week). Thus, the beginning of the week may be quite calm, but then high volatility and multidirectional movements are expected.
Explanations of the illustrations:
Price levels of support and resistance (resistance /support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.
