5M chart of GBP/USD
On Tuesday, GBP/USD traded higher, stayed above the trendline and the key lines of the Ichimoku indicator. Therefore, we can confirm that the uptrend is still present, and the pound cannot even properly enter a bearish correction. Yesterday, there were no important reports published in the UK or the US, so there was nothing to react to. Volatility has fallen to "average" values in recent weeks. The market is in doubt. It does not want to sell, and it can no longer buy. The situation is becoming even more complicated. The pound should fall, but the market still refuses to let go, ignoring all positive factors for the US dollar.
There were a sufficient number of trading signals. For the pound, we also fixed the latest values of the Ichimoku indicator lines, since the movement has recently stayed within a limited range. However, this didn't even help, since the lines and levels were very close to each other. Therefore, as soon as a signal was formed, the price immediately found itself near the next closest level. And the distance between them was no more than 30 points. Thus, traders could have earned several dozen points of profit, since all the signals marked in the chart were, in principle, correct. But they could also have chosen not to enter the market based on these signals, as they were not the strongest ones.
COT report:
COT reports for the British pound are again released in due time. The latest available report is for April 4th. According to this report, the Non-commercial group opened 18,000 long positions and also opened 8,800 short positions. As a result, the net position of non-commercial traders increased by 9,200 and continues to grow. The net position indicator has been steadily growing for the past 7-8 months, but the sentiment of major players remains bearish. Although the pound sterling is growing against the US dollar in the medium term, it is very difficult to figure out the reasons for the sterling's rally from a fundamental point of view. We absolutely do not exclude the scenario in which a sharper drop in the pound will begin in the short term. Formally, it has already started, but so far this movement looks more like a flat market. We also note that both major pairs are currently following roughly the same pattern, but the net position for the euro is positive and even implies a soon-to-be-ending upward impulse, while for the pound, it is negative, which suggests further growth. The British currency has already rallied by 2,100 points. It is stunning growth without a strong downward correction, so a further rally will be absolutely illogical. The non-commercial group now holds a total of 61,000 shorts and 46,000 longs open. We are still skeptical about the long-term uptrend of the British currency and expect it to fall.
1H chart of GBP/USD
On the one-hour chart, GBP/USD collapsed on Tuesday, but it is already recovering. A new downtrend line has been formed and the price is located below the Ichimoku indicator lines. That's why so far everything says that the downward movement will continue. However, today's macroeconomic background might have a strong influence on the market sentiment, so by the end of the day, the pair could be anywhere. For April 12th, we highlight the following important levels: 1.1927, 1.1965, 1.2143, 1.2185, 1.2269, 1.2342, 1.2429-1.2458, 1.2589, 1.2659, 1.2762. The Senkou Span B (1.2355) and Kijun-sen (1.2400) lines can also generate signals. Rebounds and breakouts from these lines can also serve as trading signals. It is better to set the Stop Loss at breakeven as soon as the price moves by 20 pips in the right direction. The lines of the Ichimoku indicator can change their position throughout the day which is worth keeping in mind when looking for trading signals. On the chart, you can also see support and resistance levels where you can take profit. On Wednesday, Bank of England Governor Andrew Bailey will deliver two speeches in the UK. Meanwhile, the US will release an important inflation report. Each of these three events may provoke a market reaction, but the main focus should be on inflation.
Indicators on charts:
Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals.
Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines.
Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT chart is the size of the net position of each trader category.
Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.
