GBP/USD 5-Minute Analysis
Once again, the GBP/USD pair attempted to correct on Tuesday but failed to consolidate above either the critical line or the 1.2605–1.2620 area. As a result, the decline in quotes may resume—or, more accurately, it has already resumed. During the second half of Tuesday, we observed a decline that was as strong as the preceding rise. Thus, yet another corrective wave ended before it could properly start. This situation doesn't surprise us, as we still believe the British pound is bound to fall. There have been no recent news or events that could alter the global fundamental background or market sentiment. Without such changes, what could drive the pound to rise?
We expect a renewed decline targeting the 1.2429–1.2445 area. If the price consolidates above the descending channel, the Kijun-sen line, and the 1.2605–1.2620 area, we could potentially discuss a stronger correction. But for now, that scenario seems unlikely. On Tuesday, there were no noteworthy news events in the U.S. or the UK, leaving traders with nothing to react to during the day.
However, Tuesday's trading signals were quite interesting. The price initially bounced off the 1.2516 level, showing growth toward the 1.2605–1.2620 area. It then rebounded from this area and returned to the 1.2516 level by the end of the day. As a result, traders could have executed two trades, each yielding at least 50–60 pips of profit. Tuesday's movements were highly technical and favorable for trading.
COT Report
COT (Commitment of Traders) reports for the British pound show that commercial traders' sentiment has fluctuated over the years. The red and blue lines representing the net positions of commercial and non-commercial traders constantly cross and are often close to the zero mark. The latest downtrend occurred when the red line was below zero. The red line is above zero, while the price has breached the important 1.3154 level.
According to the latest COT report for the British pound, the Non-commercial group closed 18,300 BUY contracts and 2,500 SELL contracts, resulting in a 15,800 reduction in the net position for the week.
The fundamental backdrop still offers no basis for long-term pound purchases, and the currency remains at risk of resuming its global downtrend. There is an ascending trendline on the weekly timeframe, meaning a long-term fall cannot yet be confirmed. However, while the pound tested this trendline, it has yet to break below it. A rebound and correction in the long term remain possible, but we expect this trendline to be breached, with further declines to follow.
GBP/USD 1-Hour Analysis
On the hourly timeframe, the GBP/USD pair maintains a generally bearish outlook, suggesting sustained and significant declines for the British currency. The first correction turned out to be a flat and is already over. The new correction is also proving to be flat. There are still no fundamental reasons to expect significant growth in the British pound. At present, the price cannot even overcome the nearest resistance area.
For November 27, we highlight the following important levels: 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. Senkou Span B (1.2803) and Kijun-sen (1.2599) lines can also be sources of signals. Setting the Stop Loss level to breakeven when the price passes 20 pips in the right direction is recommended. The lines of the Ichimoku indicator may move during the day, which should be considered when determining trading signals.
No significant events are scheduled in the UK on Wednesday, but the U.S. will release several interesting reports. Particular attention should be paid to the PCE Price Index (Personal Consumption Expenditures Price Index) and the durable goods orders report. The GDP report could also trigger market reactions, but collectively, these reports may not be significant enough to compel strong market moves, as they can often be overlooked.
Illustration Explanations:
- Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
- Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
- Yellow Lines: Trendlines, channels, or other technical patterns.
- Indicator 1 on COT Charts: Reflects the net position size of each trader category.
