GBP/USD 5M
The GBP/USD pair, just like the EUR / USD pair, tried to continue its upward movement on Tuesday, May 11. However, nothing really came of it, since the pair stood in a side channel 50 points wide for most of the day. On the 5-minute timeframe, you can clearly see how things were on Tuesday. Only the speech of the head of the Bank of England, Andrew Bailey, was scheduled for yesterday, but, as we can see, it did not have any special influence on the course of trading. Therefore, it was possible to rely only on the technique during the day, but it did not give anything to traders either. Absolutely nothing. The pair did not even approach the important Ichimoku indicator lines or extremum levels, around which a strong signal could form. Thus, not a single signal was generated during the day. And for the better, since there was an open flat all day, which did not promise anything but losses. In general, the traders are still in a bullish mood, which is still very difficult to explain. The fact is that the last round of the upward movement began last Friday and then everything was logical, since the US macroeconomic reports were very weak. But the continuation of the upward movement on Monday and the absence of a correction on Tuesday is more difficult to explain, since there was no macroeconomics on these days, and the only event worthy of attention was the results of the elections to the Parliament of Scotland, which showed the strengthening of the position of the party of Nikola Sturgeon, which actively promotes a referendum for independence and secession from Great Britain. This news can hardly be called positive for the British pound.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair has recently been near the resistance level of 1.4134, but no signals are being formed around it. No pullback or correction that would be logical at this time. The pound is rising again despite very weak fundamentals from the UK. It seems that the combination of the speculative factor and the factor that the American economy is being pumped with trillions of dollars are the reasons for the new growth of the British pound. The first factor supports the pound, the second creates pressure on the dollar. Thus, from the point of view of the foundation, the pair remains difficult to predict. Therefore, we continue to pay attention only to the most important levels and lines: 1.4008, 1.4080, 1.4181 and 1.4240. Senkou Span B and Kijun-sen lines are now very far from the price. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. There will be a lot of important events on Wednesday. A report on changes in GDP in March, changes in industrial production in March, as well as changes in GDP for the first quarter will be published in the UK. The UK economy is expected to contract by 1.6% q/q. However, the problems of the British economy have been known for a long time, which does not prevent the pound from rising. Thus, even if we see a value of -2.0% today, this does not mean that the pound will fall. Also, Bailey will give a speech today, and a report on US inflation will be published, which is of the greatest interest to the markets at this time.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 15 points during the last reporting week (April 27-May 3). A slight change in price, but the pair did not stand still. Professional traders closed 7,600 buy contracts and opened almost 2,000 sell contracts during the same period of time. Thus, the net position for the "non-commercial" group of traders has decreased by almost 10,000 contracts, which is a lot for the British currency. In other words, the mood of the major players has become less bullish. Now let's take a look at the chart of the movement of the pound/dollar pair and note that there is no weakening of the upward movement there. On the contrary, the movement has intensified (albeit only in recent days, which are not covered by the latest COT report). However, in any case, a strong decrease in the net position usually reflects a fall in the currency. In our case, there was no drop even in the days covered by the latest COT report. In general, the data on the COT reports are now completely different from what is happening in the market. We always say that absolutely any data that is used in trading must be confirmed by technical signals. Thus, at this time, the data from the COT reports are not confirmed. We have already discussed why this can be so. First, the COT reports for the pound clearly do not take into account the increase in supply in the US dollar market. Secondly, the COT reports are released with a delay of several days, so the pound's rise by 300 points can be reflected by the specific actions of the major players in the next report. However, in any case, based on the COT reports, no important conclusions can now be drawn for any future.
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.
