GBP/USD 5M

The GBP/USD currency pair fell sharply by more than 200 points on Tuesday. In principle, everything that we said in the article on the euro/dollar is also true for the British currency. The only difference is that several macroeconomic reports were published in the UK yesterday morning, which could have provoked a slight increase in the pound. However, at the same time, without any statistics, the euro was also growing. Unemployment in the UK, unexpectedly for many, fell to 3.6%, while wages rose by 5.5%. This, of course, is less than the current inflation, but such growth is better than none. Thus, the pound really had every reason to rise yesterday morning. And then it had grounds for a fall, since the seemingly average inflation report in the US disappointed traders so much that they simply rushed to buy the US dollar. Inflation fell less than the market expected, so traders rightly decided that now the Federal Reserve will definitely raise the key rate next week by 0.75%. The question only raises the strength of the market's reaction to US inflation, everything else is quite logical.

But there was a problem with trading signals on Tuesday. Not a single signal was formed during the European trading session, and all signals from the US session should have been ignored, since they were formed either during the release of the inflation report, or a little later, when it was still not clear what to expect from the pair, and the price has already passed 200 points down. Thus, trades should not have been opened yesterday.

COT report

The latest Commitment of Traders (COT) report on the British pound released yesterday, was very eloquent. During the week, the non-commercial group closed 5,700 long positions and opened 15,500 short positions. Thus, the net position of non-commercial traders immediately fell by 21,100, which is a lot for the pound. The net position indicator has been growing for several months, but the mood of the big players still remains pronounced bearish, which is clearly seen in the second indicator in the chart above (purple bars below zero = bearish mood). And now it has begun a new fall, so the British pound still cannot count on a strong growth. How can you count on it if the market sells the pound more than it buys? And now its fall has resumed altogether, so the bearish mood of major players in the near future can only intensify. The non-commercial group now has a total of 103,000 shorts and 52,000 longs open. The difference is twofold. The net position will have to show growth for a long time to at least equalize these figures. Moreover, COT reports are a reflection of the mood of major players, and their mood is influenced by the foundation and geopolitics. If they remain the same as they are now, then the pound may still be in a "downward peak" for some time.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. September 14. Joachim Nagel provokes the strengthening of the European currency.

Overview of the GBP/USD pair. September 14. Market skepticism towards the pound has not gone away, but now is a good time for a global trend reversal.

Forecast and trading signals for EUR/USD on September 14. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pound/dollar pair has now completed an upward trend on the hourly timeframe. At least the price has already consolidated below all Ichimoku indicator lines, and all because of one US inflation report. The pair may now resume its long-term downward trend and renew 37-year lows several more times. We highlight the following important levels on September 14: 1.1411-1.1442, 1.1649, 1.1874. The Senkou Span B (1.1653) and Kijun-sen (1.1569) 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. The UK will publish an important inflation report on Wednesday, which may also provoke a strong market reaction. Apart from this report, there are no other important events planned for today. But the market can still work out yesterday's US inflation report at the European trading session.

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.