Analysis of GBP/USD 5M
On Friday, the GBP/USD pair was trading mostly flat, which is clearly visible even on the 5-minute chart. The only difference in the macroeconomic background between EUR/USD and GBP/USD was that the UK published a report on GDP, which, initially, supported the pound, and secondly, pushed it to edge down in the afternoon and for the entire day. Therefore, if the euro fell at the end of the day, the pound rose just a bit. UK GDP in the second quarter was slightly higher than expected, as was the industrial production. That supported the buyers in the morning. However, the pair still failed to settle above the critical line, and it continued to trade within the sideways channel. Furthermore, the pound did not rise significantly.
There were a lot of trading signals on Friday, but all of them were formed in a flat. During the European session, the pair bounced from the level of 1.2693 twice, forming two buy signals. In the first case, the price did not go in the right direction by even 20 points, so when the second signal was being formed, traders should have stayed in long positions. By the beginning of the US session, the pair reached the critical line, worked it out and bounced off it, forming a sell signal. Profit on the first trade was about 25 points. This was followed by a fall back to 1.2693, a rebound and another fall to 1.2693. Traders could earn a maximum of 25 more pips on these three moves.
COT report:
According to the latest report, the non-commercial group of traders closed 8,900 long positions and 6,300 short ones. Thus, the net position of non-commercial traders fell by almost 2,600 positions in a week. The net position has been steadily growing over the past 11 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term. There are no drivers for opening new long positions. Slowly, sell signals are emerging on the 4-hour and 24-hour charts.
The British currency has already grown by a total of 2,800 pips, from its absolute lows reached last year, which is a significant increase. Without a downward correction, the continuation of the uptrend will be illogical. However, there has been no logic in the pair's movements for quite some time. The market perceives the fundamental background one-sidedly, ignoring any data in favor of the dollar. The Non-commercial group of traders has a total of 83,200 long positions and 36,200 short ones. I remain skeptical about the long-term growth of the pound sterling, and the market has recently begun to pay attention to short positions.
Analysis of GBP/USD 1H
On the 1H chart, the pound/dollar pair continues to correct while trading within a sideways channel. As a result, the Ichimoku indicator lines are currently weak, and the price may cross them multiple times a day. Formally, the price has already left the channel, but we believe that the sideways movement (or flat) can still persist. However, if it proceeds to trade lower, such a scenario would also be logical.
On August 14, traders should pay attention to the following key levels: 1.2520, 1.2598-1.2605, 1.2693, 1.2786, 1.2863, 1.2981-1.2987, 1.3050. The Senkou Span B (1.2805) and Kijun-sen (1.2739) lines can also serve as sources of signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits.
Today, no significant events or reports lined up in the UK or the US. Most likely, we should brace ourselves for another low-volatility day, predominantly marked by sideways movement on the hourly chart, or probably a flat.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;
Yellow lines are trend lines, trend channels, and any other technical patterns;
Indicator 1 on the COT charts is the net position size for each category of traders;
Indicator 2 on the COT charts is the net position size for the Non-commercial group.
