Analysis of GBP/USD 5M.
The GBP/USD currency pair also adjusted on Wednesday but did it much less willingly than the EUR/USD pair. By and large, it is difficult to call this upward movement even a correction, since the pair managed to go up only 100 points from its local lows. And the previous drop was 560 points. At this time, the price is below the trend line, so the downward trend persists. In the event of a rebound from this line or Kijun-sen, the fall in the British currency quotes may resume. If there is a consolidation above the trend line, then we can expect a stronger growth of the British pound. There were no important macroeconomic statistics or fundamental events yesterday in either the UK or the US.
There were only three trading signals on Wednesday. All are formed near the level of 1.3134. In this case, this does not indicate a flat, but still indicates the weakness of the pair's movement during the day. The first signal in the form of a rebound from the level of 1.3134 turned out to be false and traders received a loss on it since the price could not go down even 20 points. This was followed by consolidation above the level of 1.3134 and at this point, it was necessary to close sell deals and open buy deals. Long positions turned out to be more successful, especially since there were two buy signals. However, the nearest target level was very far away, so traders could profit from these signals only if they closed trades manually. In principle, at least, the last transaction, in any case, should have been closed manually in the evening.
COT Report:
The latest COT report on the British pound showed an increase in bullish sentiment among professional traders. And a week earlier - the strengthening of the "bearish" mood. In general, the mood of the major players changes too often, which is seen by the two indicators in the illustration above. At the moment, the net position of the "Non-commercial" group is near zero, which means a "neutral" mood. The same conclusion is confirmed by the absolute data on the number of open contracts. There are 51 thousand of them for purchase now, and 50 thousand for sale. Almost complete equality. Moreover, since July last year, professional traders have not been able to decide where to trade the British pound. Only in December, there was a serious strengthening of the "bearish" mood, which led to a significant drop in the UK currency. The rest of the time, the players cannot decide in the medium term what to do with the pound. Therefore, the absence of a strong fall in the British pound partly corresponds to the COT reports. However, we still believe that COT reports are not the best tool for forecasting right now. At a time when the whole world is increasing demand for the dollar as a reserve currency, we can expect growth of this particular currency, despite any data from COT reports. This is exactly the picture we are seeing now in the euro currency, where purchases are growing, while the currency itself is falling. Thus, geopolitics remains in the first place in terms of importance.
Analysis of GBP/USD 1H.
On the hourly timeframe, the pair broke out of the 1.3082-1.3134 channel and is now correcting to the trend line. As long as the price continues to be located below it, the downward trend remains, and short positions are more appropriate. Today, a lot will depend on the fundamental and geopolitical background, which did not exist in the first three days of the week. On March 10, we highlight the following important levels: 1.3082, 1.3134, 1.3273, 1.3367. The Senkou Span B (1.3404) and Kijun-sen (1.3234) lines can also be signal sources. Signals can be "bounces" and "surmounts" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. Also in the illustration, there are support and resistance levels that can be used to fix profits on transactions. No major events are scheduled for Thursday in the UK, and an important inflation report for February will be published in the US. We believe that a reaction to this report should follow unless its value completely coincides with the forecast. Also, do not forget about the negotiations in Turkey between the Foreign Ministries of the Russian Federation and Ukraine.
Explanations to the illustrations:
Price levels of support and resistance (resistance /support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.
