GBP/USD 5M

Yesterday, the GBP/USD currency pair tried to show growth from the very beginning of the European trading session. However, the further the matter progressed, the clearer it became that we would not see any trend. The pound repeats the euro's fate, which, after a significant increase last week, fell into a swamp and now does not know how to get out of there. Volatility dropped sharply, and the price sadly crossed the Senkou Span B line, which itself fell more than the price rose. Thus, formally the upward trend remains, but at the same time, the pound does not show any desire to grow against the dollar. There were no macroeconomic statistics on Tuesday in the UK either, so traders could trade only on technical signals. And they had a big problem.

All trading signals were formed around the same level - 1.2259. Recall that this is a sign of a flat. And although the entire intraday movement does not look like an unambiguous flat, we still believe that this is some kind of flat. The signals themselves were also remarkably inaccurate. If the pair had accurately bounced off the 1.2259 level five times, it wouldn't have been so bad. But in fact, each rebound could be easily interpreted as overcoming. As a result, we believe that traders could open two trades on signals around the level of 1.2259. First, the pair settled below this level, and then above. There was not a single chance for a short position to go even to zero, as the pair immediately began to move up. It was possible to make a small profit on a long position, since it definitely had to be closed manually - there were simply no levels at a close distance from above. The last three signals should not have been worked out, since the first two were found to be false.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed insignificant changes. During the week, the non-commercial group closed 5,200 long positions and 10,500 short positions. Thus, the net position of non-commercial traders increased by 5,300. However, the mood of major players still remains "pronounced bearish". And the pound, despite the growth of the net position, still continues to fall. The net position has been falling for three months, which is perfectly visualized by the green line of the first indicator in the chart above or the histogram of the second indicator. Therefore, two or three insignificant increases in this indicator hardly unequivocally indicate the end of the downward trend for the pound. The non-commercial group has a total of 95,000 short positions open and only 29,000 long positions. As you can see, the difference between these numbers is more than three times. We note that in the case of the pound, the COT report data very accurately reflects what is happening in the market: the mood of traders is "very bearish", and the pound has been falling against the US dollar for a long time. In the past few weeks, the pound has been trying to show growth, but even in the chart for this paragraph (daily timeframe), these attempts look pathetic. Since in the case of the pound, the COT report data reflects the real picture of things, we note that a strong divergence of the red and green lines of the first indicator often means the end of the trend. Therefore, formally now we can count on a new upward trend. However, weak geopolitical, fundamental and macroeconomic backgrounds for European currencies still put pressure on them.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. June 22. Unexpected speech by Christine Lagarde and euro convulsions.

Overview of the GBP/USD pair. June 22. Again, great. Scotland is again talking about an independence referendum.

Forecast and trading signals for EUR/USD on June 22. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

We see that the upward trend continues on the hourly timeframe, but the British currency will have to work very hard to update its last local high. Perhaps tomorrow it will have at least grounds for this, although the report on British inflation and Federal Reserve Chairman Jerome Powell's speech are far from the fact that they will provoke the pound's growth. If the price falls back below the critical line, then the chances will increase either for a flat or for a resumption of the downward trend. Today, we highlight the following important levels: 1.1932, 1.2106, 1.2259, 1.2342, 1.2429, 1.2458, 1.2589. Senkou Span B (1.2265) and Kijun-sen (1.2216) 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. One important event is scheduled for Wednesday in America and Great Britain, which we already mentioned. We can expect volatility to increase, but we still have strong doubts about the pound's ability to show 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.