GBP/USD 5M
The GBP/USD pair traded in a swing mode all day on Thursday, April 8. Market participants were undecided in which direction to trade the pair, and there weren't any macroeconomic reports and it had no effect on the course of trading. Thus, the pound/dollar pair, by and large, was flat all day. We have already mentioned before that the pound is currently the most questionable regarding the future. Several significant fundamental factors affect it at once and it is difficult to understand which of the factors will eventually prevail over the rest. Therefore, moving in different directions is one of the most likely scenarios for the development of events right now.
Let's move on to the analysis of transactions. Two signals have already formed at the very beginning of the European session. The first one is not that false, but after it appeared the price went up by only 17 points, which was not enough even to set Stop Loss to breakeven. This was followed by either a rebound or just a reversal near the Senkou Span B line. And this is one of those cases when the signal was so vague that it could not even be worked out, although it turned out to be profitable in the end. After it was formed, the price went down 46 points and since the final target of 1.3677 was located very far away, it was possible to take profit in 40-50 points or near the 1.3737 level. Such a level is not an extreme, it is just a support level on the 4-hour timeframe, so we do not wait for signals to form around it. Then the price surpassed the 1.3755 level, of which there were already two per day, but since the Senkou Span B line was near, from which there was already one rebound, this signal was very doubtful. As a result, another rebound occurred from the Senkou Span B line, which could be worked out with 1.3737 as the target. Both sell signals from the Senkou Span B line brought about 50 points of profit in total. But there were also false signals that ate most of the earnings. A report on business activity in the construction sector was published in the UK (figure "1" in the chart), which, as we see, had no effect on the pair's movement. Federal Reserve Chairman Jerome Powell's speech (number "3") also did not cause any reaction from traders. The pound is now trading according to its own rules.
GBP/USD 1H
Everything looks much more complicated and less appealing on the hourly timeframe. The bulls failed to seize the initiative yesterday, and the bears did not build on their success. The upward trend line has been overcome, which increases the likelihood of a succeeding downward movement, but the pair also needs to correct to the upside a bit. Moreover, the current fundamental background is such that it cannot accurately answer the question, which direction is more preferable? We observed a swing and a flat yesterday. Therefore, what we have right now is not the most favorable situation for trading this pair. There are no major events scheduled in the UK on Friday. In general, we continue to recommend trading from important levels and lines, when rebounding from them and overcoming them. The most important levels and lines: 1.3724, 1.3812. Senkou Span B line temporarily dropped out of the list of important levels and lines. Bounces or breaks of these price values will be sources of signals. As before, it is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The nearest level/line is always used as targets (exceptions - if the target is too close to the signal).
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 only 37 points during the last reporting week (March 16-22). However, this fall is as conditional as the previous week's growth. The pair travels around 37 points in an hour. Thus, it is impossible to say that the pair sharply dropped over the reporting week. But the Commitment of Traders (COT) report talks about quite serious changes. Non-commercial traders closed 3,200 buy contracts (longs) and opened 4,400 sell contracts (shorts) during the reporting week. Thus, the net position for the pound immediately decreased by 7,600, which is quite a lot and reflects that the bullish mood has significantly weakened among professional traders. Thus, despite the fact that the pound shows a not so strong fall (which is clearly seen in the chart), while the COT reports that more eloquently signal the end of the upward trend. However, an assumption should also be made here. The green and red lines of the first indicator have often changed the direction of movement over the past 6-8 months, so here it just cannot be said that the end of the upward trend has been brewing for a long time. In general, the pound's situation is more complicated and confusing than the euro's. Considering the fact that much will depend on the US economy, both the euro and the pound can resume growth.
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.
