GBP/USD 5M

Yesterday, the GBP/USD currency pair continued to trade near this week's highs, but when the statistics were published in the UK, it fell down like a wreck. In total, the British currency lost more than 100 points when the market learned that business activity in the services sector fell to 51.8. This was a serious deviation from the forecast value and from the previous one. That is why the market reacted so violently. On the whole, all the other reports of the day, it can be said, were ignored, since these were reports on the same business activity in various areas of the US and the UK, which did not differ too much from their previous values. The pound began to recover its positions in the afternoon and is now again close to its highest values over the past two weeks. Therefore, nothing terrible happened for the pound. The upward trend continues, and the trend line on the hourly timeframe has withstood the onslaught. Therefore, this week the pound may continue to grow.

Yesterday's trading signals were quite diverse. The very first signal for short positions with an error of three points turned out to be extremely profitable, as an hour later a report on business activity in the service sector was released, which knocked down the pound. As a result, the pair dropped to the level of 1.2496, and it was necessary to close the short position only when the pair settled above that level. Profit on it amounted to at least 80 points. Further, the pair was in a flat for several hours and all this time formed signals around the level of 1.2496. Naturally, almost all were false. Therefore, traders could work out the very first signal for long positions, which brought a loss of about 20 points, and ignore all subsequent ones.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed almost no change. During the week, the non-commercial group closed 2,800 long positions and 3,200 short positions. Thus, the net position of non-commercial traders increased by only 500. The net position has been falling for three months already, which is perfectly visualized by the green line of the first indicator in the chart above. Or the histogram of the second indicator. The non-commercial group has already opened a total of 106,000 shorts and only 26,000 longs. Thus, the difference between these numbers is already more than four times. This means that the mood among professional traders is now "pronounced bearish" and this is another factor that speaks in favor of the continuation of the fall of the British currency. Note that in the pound's case, the COT report data very accurately reflects what is happening on the market: the mood of traders is "strongly bearish", and the pound has been falling against the US dollar for a very long time. We do not yet see specific signals for the end of the downward trend, however, usually a strong divergence of the red and green lines of the first indicator signals the imminent end of the trend and the beginning of a new one. Therefore, the conclusion is that an upward trend may begin in the near future, but it is dangerous to try to catch its beginning at the lowest point. The pound may well demonstrate another round of decline before it starts to grow.

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GBP/USD 1H

It can be seen on the hourly timeframe that the new upward trend remains relevant, as the price failed to settle below the trend line on Tuesday. Also, the pair continues to settle above the Ichimoku indicator lines. Therefore, the pound may continue to rise, based on the technical factor. Today we highlight the following important levels: 1.2259, 1.2405-1.2410, 1.2496, 1.2601, 1.2674. Senkou Span B (1.2327) and Kijun-sen (1.2463) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" 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. No major events scheduled for today in the UK, while a durable goods orders report will be released in the US. We do not believe that this report could provoke a strong market reaction. As well as the release of the Federal Reserve minutes in the evening. However, the minutes still needs to be taken into account.

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.