GBP/USD 5M

The GBP/USD currency pair resumed its downward movement on Tuesday. So far, the matter has not come to a new update of 2-year lows, but the price still remains in close proximity to them and from its 37-year lows. Since corrections must happen from time to time, we believe that this is exactly what has been observed in the last few days. The descending trend line eloquently indicates that the downward trend continues, so we have the right to expect a new fall in the British pound. However, the pound clearly does not need strong fundamental and macroeconomic reasons to continue to depreciate against the US currency. There were no important events on Tuesday, except for the ISM business activity index in the US. This report was published quite late, so the main drop was not related to it. No more interesting events in the UK this week.

In regards to trading signals, things were poor, but effective. The price bounced off the critical line twice during the European trading session, forming two sell signals. After the first pair went down a little more than 30 points, after the second - 95. Since the nearest target level from below was located very far, it was not necessary to count on its development. This means that the second deal should have been closed manually in the late afternoon. It was possible to earn at least 60 points on it. The first short position was closed by Stop Loss at breakeven.

COT report:

The latest Commitment of Traders (COT) report on the British pound, released yesterday, turned out to be as neutral as possible. During the week, the non-commercial group closed 300 long positions and opened 900 short positions. Thus, the net position of non-commercial traders immediately increased by 1,200. 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). Therefore, the growth of the British pound still cannot count. 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 87,000 shorts and 58,000 longs open. The difference is not as terrifying as it was a few months ago, but it is still noticeable. 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 as weak as they are now, then the pound may still be in a "downward peak" for some time. Also remember that it is not only the demand for the pound that matters, but also the demand for the dollar, which seems to remain very strong. Therefore, even if the demand for the British currency grows, if the demand for the dollar grows at a higher rate, then we will not see the strengthening of the pound.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. September 7. Energy crisis in the European Union. Is everything so bad?

Overview of the GBP/USD pair. September 7. Liz Truss is the new British prime minister. What does this mean for the pound?

Forecast and trading signals for EUR/USD on September 7. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pound/dollar pair maintains a downward trend on the hourly timeframe. The British currency continues to fall in the medium term and so far there is no reason to believe that the pound's decline will end in the near future. If the euro has at least an ECB meeting that can support it this week, then the pound has nothing. We highlight the following important levels on September 7: 1.1411-1.1442, 1.1649, 1.1874. The Senkou Span B (1.1698) and Kijun-sen (1.1546) 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. There are no major events scheduled for Wednesday in the UK and the US. Thus, the pair will have nothing to react to during the day, but now it does not need any events to move actively and in a trend.

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.