GBP/USD 5M
The GBP/USD pair also continued to correct and traded quite calmly on Wednesday, April 21. The quotes moved by around 60 points from the lowest to the highest of the day, which isn't much for the pound. Well, for traders, this is not enough, since it becomes much more difficult to trade in conditions of such intraday volatility. Nevertheless, several signals were formed during the day, and also one rather important report was published. Let's begin to understand the situation. The first signal formed with the opening of the European session - to buy - in the form of a rebound from the extremum level of 1.3914. It did not bring any profit to traders, since the pair only went up by 21 points, which, however, was enough to set the Stop Loss level to breakeven, at which the deal was closed. Afterwards, the price returned to the 1.3914 level and rebounded from it for the second time. Notice how accurate the rebounds were! But this time, the bulls failed to develop an upward movement again and the pair only rose by around 20 points, which was enough to set Stop Loss to zero, and the buy deal was closed at breakeven again. The third signal was formed during the US session - the pair's quotes surpassed the 1.3914 level and reached the nearest support level of 1.3891, which made it possible to get as much as 15 points of profit. The pair rebounded from 1.3891, but this level is not an extreme, so no signals were formed around it. As a result, the pound/dollar pair returned to the 1.3914 level for the fourth time, but then we would not recommend opening any positions based on signals from this level, because three signals before that did not bring the proper profit, and two turned out to be completely false...
GBP/USD 1H
The technical picture on the hourly timeframe still requires no explanation. The upward movement ended around the 40th level, we moved the nearest extreme level to 1.4008. After that, a downward correction began, which is still present. Thus, everything is going according to plan, and after the correction, the pound may resume its upward movement. Unfortunately, the pound continues to move in a "swing" mode, which is clearly visible on the 4-hour timeframe. However, the pair still manages to form mini-trends at the hour. Despite the fact that we now expect a resumption of the upward movement, it is quite possible for the pair to collapse by the same 300 points that it had previously gone up. Therefore, trading from levels and lines is still a very important aspect. Signals will be generated when the pair rebounds from them or when breakthroughs are achieved. The most important levels today are 1.4008, 1.3952 and 1.3914. The Kijun-sen line (1.3861) is also important, as signals can also form around it. As before, you are advised to set the Stop Loss level at breakeven when the price passes 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). No UK reports up for release on Thursday, April 22. However, in any case, market participants have been ignoring reports for two consecutive days now. So there is little loss. Meanwhile, we have a report on applications for unemployment benefits in America that is absolutely secondary in the current conditions.
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 160 points during the last reporting week (April 6-12). The chart clearly shows how strong the current downward correction is! Recall that professional traders have been actively reducing both buy and sell orders over the past 6-8 weeks. On February 23, around 69,000 were opened for the first and around 34,000 for the latter, then as of April 6, 44,000 Buy-contracts (longs) were opened, and 25,700 for Sell (shorts). Thus, in general, the ratio between longs and shorts has not changed. Only the number of contracts that were opened by the non-commercial group has changed. Hence the conclusion: the bullish mood persists among professional traders, but in general, fewer and fewer speculators want to deal with the "unbalanced" pound. Basically, the behavior of non-commercial traders is shown by the indicators under the main chart. The first one, which shows the change in the net positions of the three categories of traders, shows a constant change in direction, constant intersections of lines. And this is despite the fact that there has been a steady upward trend in the last 12-13 months, which does not cause any doubt. It turns out that there is a trend and it is strong, but the most important category of traders does not buy the pound in huge amounts. Moreover, the second indicator shows that non-commercial traders have been increasing their purchases and sales in the last six months. That is, there was no clear bullish mood. This only proves the fact that the pound and the euro grew in the last year on the factor of increasing the money supply in the United States. That is, big players traded in accordance with their interests and goals, but their deals were blocked by the infusion of trillions of dollars into the US economy. Well, in the reporting week, non-commercial traders began to re-open buy contracts (longs) at around 7,200. Less than a thousand sales contracts were opened. It seems that the major players are starting to believe in the growth of the "bitcoin-like" pound.
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.
