GBP/USD 5M
The GBP/USD pair was also trading quite actively last Friday, and the movement was almost identical to that shown by the EUR/USD pair. Thus, the conclusion is almost unambiguous: the dollar fell on Friday, and it's not that the pound or euro was growing either. Despite the fact that there was a de-correlation between the two major pairs in the last couple of weeks, they moved almost identically on Friday. Not a single important macroeconomic report was published in the UK that day, and the dollar began to fall, if not in the morning, then closer to the US trading session. In any event, it was not triggered by any report. As in the case of the euro/dollar, few trading signals were formed during the day. Basically, one, in the middle of the European trading session. Unfortunately, it turned out to be rather inaccurate, so at first traders could mistakenly open short positions, since the price fell by 10 points below the extremum level of 1.3800, but could not continue the downward movement. In this case, traders suffered a short trade loss of about 14 points. However, the next buy signal in the form of a consolidation above the level of 1.3800 was already unambiguously correct. After its formation, the price went up about 65 points and stopped only near the Kijun-sen and Senkou Span B lines. A long position should have been closed at a profit of about 55 points near these lines, which completely covered the loss from the first trade. So it was a very good day for traders and the move was great.
Overview of the EUR/USD pair. August 16. Preview of the week. A new wave of the pandemic in the US may postpone the Fed's plans to wind down QE.
Overview of the GBP/USD pair. August 16. Preview of the week. The British pound is awaiting information from the Bank of England and the Fed.
GBP/USD 1H
The pound/dollar pair continues to be within the downward channel on the hourly timeframe. Therefore, at the moment, the downward trend continues. However, we expect that in the near future the pair will try to settle above the downward trend channel, as well as overcome the important Senkou Span B line. Overcoming these obstacles may mean that the market is ready for more long positions in the British currency and short positions on the dollar. In technical terms, we continue to draw the attention of traders to the most important levels and recommend trading from them: 1.3754, 1.3800, 1.3886, 1.3981. Senkou Span B (1.3909) and Kijun-sen (1.3838) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. It will probably be completely calm in the UK and the United States on Monday. No important reports or events planned for the day. Thus, there will be nothing for traders to react to during the day. This means that there is a high probability of flat and weak volatility. However, the pound/dollar pair is still less prone to idle time in one place lately, therefore, most likely, we will still see some movement.
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 40 points during the last reporting week (August 3-9). And, if big players continue to reduce their net position in the euro, then in the pound's case, professional traders started to buy the British currency again. Pay attention to the green line of the first indicator (net position of the "non-commercial" group) - it turned up and is growing. Thus, we might be witnessing an emerging new upward trend. However, major players were not particularly zealous in opening new contracts in the reporting week. To be more precise, they only closed them. The number of Buy-contracts (longs) for non-commercial traders decreased by almost 2,000, and 5,500 Sell-contracts (shorts). However, this still means that the net position has grown by 3,500, and the mood of the most important group of traders has become more bullish. Specifically "more bullish" and not "less bearish", because at this time the non-commercial group has more buy contracts that are open than that of sell (shorts) (43.7 thousand versus 37.6 thousand). This suggests that the bullish sentiment may indeed intensify in the coming months. Moreover, the technical picture for the pound is approximately the same as for the euro: quotes dropped to the low of the first round of correction against the upward trend and were unable to continue moving down. Therefore, the probability of a new round of the upward movement is high. As you can see, both Commitment of Traders (COT) reports and technical analysis predict approximately the same scenario. Consequently, we have the right to expect a return of the pound/dollar quotes to the level of 1.4240.
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.
