GBP/USD 5M
The GBP/USD currency pair also traded with a minimal downward bias on Wednesday, constant corrections and pullbacks. It is also dangerously close to the Senkou Span B at the moment, and the similarity of the movements of both pairs makes us wonder if the macroeconomic background has at least some influence? As we have already said, different reports were published on different days this week, which were related either to the euro/dollar pair, or to the pound/dollar pair. However, both of these pairs showed almost the same movement. Let's see, because the results of the European Central Bank meeting will be announced today, which have nothing to do with the pound. The UK published its inflation report on Wednesday, which showed its next acceleration. In theory, this report was supposed to provoke the pound's growth, since after it the probability of raising the key rate by the Bank of England at the next meeting immediately by 0.5% increased significantly. However, instead of growth, we saw a fall. It should be noted that the pound was rising in price throughout the beginning of the week, so the bulls could already be satisfied with long positions on an openly bearish trend. One way or another, the prospects for the pound remain vague.
Everything went well on the 5-minute TF at first. A buy signal was formed near the Senkou Span B line, after which the pair went up 28 points. Of course, it was not possible to make money on this signal, but at least it was possible to set Stop Loss to breakeven. But then "songs and dances" began near the Senkou Span B line and the extreme level of 1.1974. The price constantly changed the direction of movement, consolidating above this area, then below. Of the pile of signals in this area, one could try to work out only the first one, all subsequent ones should be ignored. And the first signal about consolidating below 1.1974, of course, also turned out to be false. The result was a small loss.
COT report:
The latest Commitment of Traders (COT) report on the British pound again showed insignificant changes. During the week, the non-commercial group closed 5,700 longs and 2,800 shorts. Thus, the net position of non-commercial traders increased by 2,900. But what does it matter if the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above? And the pound, in spite of everything, still cannot show even a tangible upward correction? The net position fell for three months, then grew for some time, but what's the difference if the British currency still continues to depreciate against the US dollar? We have already said that the COT reports do not take into account the demand for the dollar, which is probably still very high right now. Therefore, even for the strengthening of the British currency, the demand for it must grow faster and stronger than the demand for the dollar. The non-commercial group currently has a total of 93,000 shorts open and only 34,000 longs. The net position will have to show growth for a long time to at least equalize these figures. Neither macroeconomic statistics nor fundamental events support the UK currency. As before, we can only count on corrective growth, but we believe that in the medium term, the pound will continue to fall.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. July 21. The ECB is unlikely to fundamentally change the mood of the market.
Overview of the GBP/USD pair. July 21. Election of the prime minister of Great Britain: there are three candidates left.
Forecast and trading signals for EUR/USD on July 21. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound has overcome both the descending trend line and the Senkou Span B line on the hourly timeframe. Thus, the pound's short-term growth can formally continue now, if the fundamental and geopolitical backgrounds did not remain entirely on the side of the dollar. Nevertheless, let's not bury the pound ahead of time. It still deserved a two-three-week correction. We highlight the following important levels for July 21: 1.1807, 1.1874, 1.1974, 1.2106, 1.2175. The Senkou Span B (1.1985) and Kijun-sen (1.1921) 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. There are no major reports or other events scheduled for Thursday in either the UK or the US. Therefore, today traders will have nothing to react to. However, the pair may continue to move quite actively.
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.
