GBP/USD 5M
The GBP/USD pair as a whole, continued to fall on Wednesday, which began the day before. However, everything is far from simple on the 5-minute timeframe. The pair reached important lines and levels almost ten times during the day, each time either forming a signal or indicating that the intraday trend is maintained. Let's start everything in order. First, no important report during the day. In Great Britain we received a report on the index of business activity in the service sector, which turned out to be worse than forecasted and after its release the pound's quotes continued to rise within the day. Therefore, it had no influence on the course of trading. Secondly, now the pound may be in the process of getting rid of speculators. We talked about this in more detail in the fundamental article. Therefore, the pound might be accompanied by a "storm" and movements might not be logical in the coming weeks.
Nothing interesting during the Asian session, but with the opening of the European one, the movements began! The price rebounded off the Kijun-sen line and formed the first sell signal immediately when the European session opened. The 1.3812 level could not be taken into account, as it was located too close to the Kijun-sen line. Therefore, the target is the Senkou Span B line, which the bears reached just perfectly. This trade brought in exactly 50 points in profit. Further, a rebound followed from this line, which should have also been worked out with a long position. This time the price also moved more than 50 points, but already to the upside. Here traders could take profits around the 1.3812 level, but it was easily overcome at the first candlestick, therefore, it was also possible to close deals near Kijun-sen. Another +40-50 points. This was followed by another sell signal in the form of a rebound from the Kijun-sen line, and again the 1.3812 level could be ignored, because it was located too close to the entry point, plus the price had already crossed it several times earlier. The bears took the pair to the Senkou Span B line and easily surpassed this line, allowing traders to remain in short positions while aiming for 1.3755 and 1.3737, which were also perfectly reached! As a result, another 50 to 90 points profit. The rebound from the 1.3737 level could not have been worked out, because this is the support level from the higher timeframe, and not the extremum level. However, even a long position would be profitable here. Furthermore, price taking above the Senkou Span B line is false and the one below the Senkou Span B line is not false. The first signal brought a loss of up to 20 points, the second was profit, but a small one. Thus, on average, traders today could earn at least 120-140 points of profit.
GBP/USD 1H
Everything looks much more complicated and less beautiful on the hourly timeframe. The bulls failed to seize the initiative and settle above the critical line, so the downward movement continued. At first, the pound/dollar pair rebounded off the trend line, but the bulls failed to surpass the Kijun-sen line again, so the downward movement resumed and this time the trend line was broken. Therefore, the trend has changed to a downward one. Therefore, the succeeding downward movement is more preferable. Tomorrow, in addition to Federal Reserve Chairman Jerome Powell's speech, the UK PMI for the construction sector will be published, but it is unlikely to cause a serious reaction. In general, we continue to recommend trading from important levels and lines, when rebounding from them and overcoming them. The most important levels and lines: 1.3812, 1.3755 and the Kijun-sen line (1.3832). Signals can be rebounds and once levels and lines are surpassed. Do not forget about placing a Stop Loss order at breakeven if the price moves 20 points in the right direction. The nearest level/line is always used as targets (exceptions - if the target is too close to the signal).
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by only 37 points during the last reporting week (March 16-22). However, this fall is as conditional as the previous week's growth. The pair travels around 37 points in an hour. Thus, it is impossible to say that the pair sharply dropped over the reporting week. But the Commitment of Traders (COT) report talks about quite serious changes. Non-commercial traders closed 3,200 buy contracts (longs) and opened 4,400 sell contracts (shorts) during the reporting week. Thus, the net position for the pound immediately decreased by 7,600, which is quite a lot and reflects that the bullish mood has significantly weakened among professional traders. Thus, despite the fact that the pound shows a not so strong fall (which is clearly seen in the chart), while the COT reports that more eloquently signal the end of the upward trend. However, an assumption should also be made here. The green and red lines of the first indicator have often changed the direction of movement over the past 6-8 months, so here it just cannot be said that the end of the upward trend has been brewing for a long time. In general, the pound's situation is more complicated and confusing than the euro's. Considering the fact that much will depend on the US economy, both the euro and the pound can resume growth.
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.
