GBP/USD 1H
The pound/dollar also began to adjust on Monday, as sellers could not find new reasons to continue the sale. Thus, the general trend remains downward, which is clearly signaled by the downward channel, and the downward movement could resume after the upward pullback is completed. Thus, nothing terrible happened to the US currency on the first trading day of the week. Moreover, the pair's quotes are getting closer to the critical Kijun-sen line, the rebound from which may coincide with the rebound from the upper line of the channel, which will trigger the resumption of the downward trend. However, do not completely put an end to the prospects of the bulls. If the downward channel is overcome, then buyers will begin to dominate the market, and sellers will go into the shadows.
GBP/USD 15M
The lowest linear regression channel turned up on the 15-minute timeframe, so we have the first sign of a beginning of a correction, which is already visible to the naked eye on the hourly timeframe.
COT report
The latest COT report, which covers the dates June 10-16, shows that during this period of time, professional market players were busy closing sales contracts. In other words, the picture during the reporting week was exactly the same as for the euro. It is not the pound or the euro that raised demand during the indicated period, due to which these currencies became more expensive. On the contrary, demand for the dollar decreased, traders closed sell contracts, which led to the growth of European currencies. This is precisely what we told traders to focus their attention on earlier, since there were simply no special reasons to buy the euro and the pound in recent weeks. Nevertheless, both currencies cheerfully rose, and now, as they say, "repay debts." It is also worth noting that, during the reporting week, speculators also closed purchase contracts, hedgers closed both types of contracts, in general, the pound lost about 32,000 more contracts. Thus, banks, large companies, investment funds and others were involved in the closing of, rather than the opening of, contracts during the reporting week. Based on this, we believe that the US dollar has excellent chances for further growth.
The fundamental background for the GBP/USD pair continues to be more negative than positive. There weren't any important and interesting events worthy of attention in both the UK and the United States on the first trading day of the week. Thus, it is impossible to say that the pair began to adjust due to some events or reports. As in the case for the euro and the pound, one topic is the main one - Brexit and negotiations on Brexit with the European Union. However, the parties do not seem to be in a hurry to solve pressing problems. The next round of negotiations is unclear when it will begin. Boris Johnson said he was going to agree on everything with Brussels until the fall, and Michel Barnier continues to accuse London of delaying negotiations and unwillingness to make concessions. All this looks more like some kind of farce, rather than the desire of the two parties to sign an agreement that will determine their relationship for many years and decades. Although it is possible that London really does not want to sign any comprehensive agreements. Earlier, Boris Johnson and the British negotiators have already stated that they want to achieve separate agreements in various fields, rather than one comprehensive one. Therefore, it is possible that London is really just pushing through its version of the deal and will not agree to any other option. This is very bad news for the pound...
There are two main scenarios as of June 23:
1) The initiative for the pound/dollar pair remains entirely in the hands of sellers, since the upward trend line has been overcome, and it has not yet been possible to get out of the downward channel. Therefore, short positions with the target support level of 1.2268 remain relevant now. However, to open new short positions, we recommend waiting for the price to consolidate below the support area of 1.2404-1.2424. Potential Take Profit in this case will be about 150 points.
2) Sellers continue to dominate the market and do not leave any chances for the bulls. Thus, you are advised to open buy orders but not before consolidating quotes above the downward channel. In this case, the bulls will be able to count on further growth with targets of the Senkou Span B line and the resistance area of 1.2719-1.2759. Potential Take Profit in this case will be from 110 to 200 points.
