GBP/USD 5M
The GBP/USD pair was trading rather ambiguously on July 7. An open flat was observed in the first half of the European session, after which an upward movement began, which was subsequently replaced by a strong decline in the pound's quotes. If important statistics were published or there were any important speeches during the day, then such movements would be logical. However, in our case, there were none for the pound/dollar pair (only late in the evening - the Federal Reserve minutes). We have already suggested in the euro/dollar article that traders might have started buying the dollar before the minutes was published, hoping to hear hints about a certain time frame for curtailing the quantitative incentive program. In theory, this is possible. However, somehow the dollar has grown too zealously in recent weeks solely on one factor of the possible curtailment of the QE program in the United States. As for trading signals, yesterday, three of them were formed on the 5-minute timeframe. Moreover, the extremum level at 1.3800 and the Kijun-Sen line at 1.3812 should be considered as a kind of support/resistance area. In practice, it would look like this: if the price settles above 1.3800, then you need to wait for the Kijun-sen line to be crossed and vice versa. As a result, the price initially bounced off the Kijun-sen line and settled below 1.3800, but this signal turned out to be false and led to an impressive loss on a short position - about 30 points, since the quotes eventually settled above the critical line, which was a new signal. but already in long positions, which also turned out to be false. On the second trade, traders lost 14 points. The third signal, again to sell, should not have been worked out, because by that moment at least two false signals had already been formed, and in fact - much more. Unfortunately, it is a very bad day for traders, but it is impossible to make a profit every day. The pair's movements were very bad yesterday.
Overview of the EUR/USD pair. July 8. The European Union is preparing for the fourth "wave" of the pandemic. The European Commission increases GDP forecasts.
Review of the GBP/USD pair. July 8. The Bank of England and the UK authorities continue to "put on a good face on a bad game."
GBP/USD 1H
The pair's quotes are trying to resume the downward trend on the hourly timeframe after they have settled above the downward trend line. However, at this time it is not even clear whether it will resume in the end or not. In the last review, we warned traders that movements might be completely illogical. Now such movements are taking place on both timeframes. The picture is completely incomprehensible, and traders cannot really decide in which direction to trade. The pound seems to be ready to continue falling to the 1.3600-1.3666 area, but so far it cannot do this. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3731, 1.3800, 1.3859, 1.3898. Senkou Span B (1.3865) and Kijun-sen (1.3813) lines can also be signal sources. 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. On Thursday, nothing interesting will happen in the UK again, and in the United States - only one minor report on applications for unemployment benefits. The illogical movements, low volatility, "swing" or moving erratically - these are the attributes, and by seeing it yesterday, we will not be surprised at all if it happens.
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 50 points during the last reporting week (June 22-28). However, there is still a feeling that the current decline in the pound is a temporary phenomenon. The Commitment of Traders (COT) report showed different pictures at different times, but the pound still continues to grow in the long term. A group of non-commercial traders closed 35 buy contracts (longs) and opened 454 sell contracts (shorts) during the reporting week. Thus, the net position decreased by 420 contracts. But seriously, you shouldn't even pay attention to these changes, since they are minimal. Nevertheless, the mood of professional traders is still bullish, as the total number of open buy contracts in the Non-commercial group remains 1.5 times greater than the number of sell contracts. Although professional traders for the pound did not buy the British currency at breakneck speed in the last year, nevertheless, the pound has been growing all this time. The first indicator shows that the net position of non-commercial traders (green line) has been falling in recent weeks, but this decline pattern is fundamentally different from a similar line for the euro. If there was a clear trend for the euro and the actions of large players were indeed reflected in the COT charts, then in the case of the pound, the data that reflect the actions of non-commercial traders is very chaotic and does not fit well with how the British currency has been moving in the last year. Actually, the indicators do not even show that the pound was actively bought, although the British currency has sharply grown over the past year and a half. Thus, once again it should be remembered that the pound may rise simply because the money supply in the United States has inflated and continues to swell. Consequently, the dollar depreciates, and as a result, the pound's rate rises.
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.
