Analysis of GBP/USD 5M

GBP/USD continued its upward movement on Monday. The British pound kept rising in the absence of any meaningful news or report. There's really nothing more to say. Even those traders who didn't believe in the logic behind the pound's rise could see it for themselves on Friday or Monday. The pound rises regardless of what happens in the market. Volatility was low, which didn't hinder the new rise. Since the current movement is completely illogical, it wouldn't make much sense to discuss its prospects. This way, the British currency may rise back to $2.16 against the dollar. If there's no reason for it.

As we've already mentioned, there were no macroeconomic or fundamental events in either the UK or the US on Monday. Also, there were no trading signals during the day. It's hard to say whether this is a good or a bad thing. The pair crossed the Kijun-sen line on Friday, but it's hardly advisable to open a trade on Friday to profit from it on Monday. Therefore, we believe that nothing terrible has happened. It's better to earn less than to lose. And it is quite difficult to buy the British pound right now since no one can offer a good explanation behind its growth.

COT report:

COT reports on the British pound show that the sentiment of commercial traders often changes in recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, constantly intersect and generally remain close to the zero mark. According to the latest report on the British pound, the non-commercial group opened 19,800 buy contracts and closed 1,200 short ones. As a result, the net position of non-commercial traders increased by 21,000 contracts over the week. Sellers continue to hold their ground, but they have a small advantage, and it is also unstable. The fundamental background still does not provide a basis for long-term purchases of the pound sterling, and the currency has a good chance to resume the global downward trend. The trend line on the 24-hour TF clearly shows this. Almost all of the factors point to the pound's decline, but it continues to resist.

The non-commercial group currently has a total of 68,500 buy contracts and 67,500 sell contracts. Now the bulls no longer have a significant advantage, but the bears are also not in a rush to work on the downward potential. Therefore, the pound still has the potential to fall.

Analysis of GBP/USD 1H

On the 1H chart, GBP/USD continues its upward trend, which serves as a correction. The market shows that it is willing to buy the pound regardless of the fundamental and macroeconomic background, or even the lack thereof. Therefore, it is futile to analyze any patterns. Even breaking the current trend line will not necessarily mean that a downtrend will start. The price breached this line on Friday, and nothing significant followed.

As of May 28, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2691-1.2701, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2584) and Kijun-sen (1.2717) lines can also serve as sources of signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals.

On Tuesday, there are no significant events scheduled in the UK or the US. This is unlikely to affect the pair's movement, as it continues to trade sluggishly and mostly shows growth regardless of fundamentals and macroeconomics. Therefore, it's unlikely that we will see any drastic changes today. Volatility will likely remain low, and any corrections are expected to be minimal.

Description of the chart:

Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;

The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;

Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;

Yellow lines are trend lines, trend channels, and any other technical patterns;

Indicator 1 on the COT charts is the net position size for each category of traders;