GBP/USD 5M
The GBP/USD pair moved quite actively again on July 20. The British currency was again under pressure from the market over the past day, but this time the fall was not too strong. It seems that the bears' fervor is weakening bit by bit, but it is too early to talk about the end of the downward movement. Recall that we expected the pound to fall to the area of 1.3600-1.3666 and at the moment the price is in this range. The question is, will it continue to fall? If traders continue to pay so much attention to the epidemiological issue in the UK, then most likely yes. It should also be noted that macroeconomic statistics were not available in either the US or the UK on Tuesday. Thus, traders could only make trading decisions based on technique and disappointing news about the course of the fourth "wave" of the pandemic in Britain. Let's now figure out how you should have traded yesterday. By and large, there was only one signal during the past day. The price, ideally in the middle of the European trading session, reached the extremum level of 1.3677, bounced off it and fell by 100 points. It is clear that it would not have been possible to get 100 points of profit on this signal. However, the short position was clearly profitable. By the middle of the US trading session, the price was near the level of 1.3600 and, since the price did not reach the nearest target, the short position had to be manually closed with a profit of about 60 points. No more signals were formed during the day. Therefore, congratulations on the excellent result.
Overview of the EUR/USD pair. July 21. Is the trade conflict between the US and China on the verge of a new escalation?
Overview of the GBP/USD pair. July 21. The pound continues to fall down against the background of the fourth "wave" of the epidemic in the UK.
GBP/USD 1H
The pound/dollar pair will continue to move down quite sharply on the hourly timeframe. However, this downward movement still raises some doubts. The fact is that it was provoked by a difficult epidemiological situation in Britain, but the markets are unlikely to work out a medical problem for a long time. Still, this is the foreign exchange market, so participants look at macroeconomic indicators. Nevertheless, while the downward movement continues, there is still no trend line or channel for the pound/dollar pair, which could guide traders on the moment when the downward movement could end. The current movement is clearly impulsive, so it can end as quickly as it began. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3519, 1.3564, 1.3677, 1.3731, 1.3754. Senkou Span B (1.3825) and Kijun-sen (1.3734) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. No important and interesting reports and events in the UK and the US on Wednesday. However, the volatility for the pound/dollar pair may remain quite high, and the pound itself may continue its downward movement.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 35 points during the last reporting week (July 6-12). However, this is not a price change that can be considered significant. During the reporting week, the group of traders "non-commercial" opened only 1,700 sell contracts (shorts), but at the same time it closed 8,000 buy contracts (longs). Thus, the net position of professionals has decreased by almost 10,000 contracts. Considering that only around 100,000 contracts were opened for the major players before last week, then 10,000 is a serious change in the mood of professional players. Thus, the mood of non-commercial traders has become much less bullish than before, and is already approaching the concept of neutral, as they have 43,000 buy contracts and 36,600 sell contracts left open. Almost complete equality. Based on this, we can assume that the pound may continue to fall. From our point of view, the pound currently has more chances for a further fall than the euro. This is supported by the difficult epidemiological situation in the UK, as well as a stronger decline in the net position. However, one should not write off the fact that the Federal Reserve and the US Treasury are injecting trillions of dollars into the American economy. This factor can still strongly influence the demand and supply of the US currency in the foreign exchange market. Consequently, we still expect that the pound/dollar pair may drop to the 1.3600-1.3666 area, but we do not consider the option with a further fall.
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.
