GBP/USD 5M
Yesterday, the GBP/USD pair continued to trade in the same mode as on Monday. In yesterday's article, we warned you that the pair will likely move in ways that might be unworkable, so it might be better not to trade it for a few days. Basically, this advice was very helpful, as shown by the movements on the second trading day of the week. Despite the fact that as many as three strong and accurate signals were formed on the 5-minute timeframe, it would still not have been possible to make money on them, since volatility was around 60 points. It doesn't seem to be little, but it's also not a lot. Nevertheless, let's try to deal with trading signals and deals that should and should not have been opened. In principle, a long analysis is clearly not worth it. At the beginning of the European session, it became clear that the "swing" would continue. The price began to "dance" around the extremum level of 1.3886, which could have created false signals, if not for yesterday's warning. First, the price settled below the 1.3886 level, then higher, then lower again. All this within an hour. Therefore, when the pair surpassed the third level, it became clear that it was not worth opening deals in the near future. Next, a signal was generated for surpassing 1.3886 from the bottom up. From our point of view, it should not have been worked out either, after it moved around the 1.3886 level in the morning. The price rose by as much as 20 points and reached the Kijun-sen line, from which it rebounded. At least there were no attempts to settle above this line. This sell signal could have been worked out, since the critical line was not deemed as something "invalid". The price went down again by an absolute minuscule, around 12 points, so traders could close the deal near the 1.3886 level, earn those unfortunate 12 points, offset the losses on the EUR/USD pair and leave the market. For obvious reasons, it was also not necessary to work on a buy signal upon a rebound from the 1.3886 level. Moreover, the price rose to the critical line again, which was located nearby. No important macroeconomic report in either the UK or the US.
GBP/USD 1H
The technical picture on the hourly timeframe still requires no explanation. The upward trend is maintained thanks to a weak uptrend line, and a rebound from it triggered a new round of a weak upward movement. Unfortunately, the pound continues to move in a swing mode as it moves erratically on almost all timeframes, starting from the 4-hour and down. Therefore, despite the fact that according to the technique we can now expect the resumption of the upward trend, it is quite possible that the pair will continue to move down by another 150 points, surpassing the trend line. The pair went over the 1.3886 level several times on Monday, and then it falsely crossed the trend line on Tuesday, afterwards it began a new round of upward movement. In general, now the technique also generates false signals, and in general the situation is very unfavorable and threatens with losses. Will pay attention to the most important levels and lines on Wednesday: 1.3945, 1.3835 and Kijun-sen (1.3915), Senkou Span B (1.3839) and the trend line. However, there is no guarantee that a strong signal will form near them. For example, it is definitely not worth working out a signal that was formed yesterday when rebounding off a trend line. You are advised 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). No important events planned in the UK on Wednesday, while the results of the two-day Federal Reserve meeting will be announced in the United States, and we also have a press conference from Fed Chairman Jerome Powell. It wouldn't be the worst decision to not enter the market for the pound/dollar pair for several days.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 200 points during the last reporting week (April 13-19). As for the Commitment of Traders (COT) report, the latest results did not show any significant changes in the balance between buy and sell contracts for the group of non-commercial traders. Non-commercial traders opened 10,500 Buy-positions (longs) and 8,200 Sell-positions (shorts) during the reporting week. Thus, their net position slightly increased by 2,300 contracts, and the sentiment became a little more bullish. However, these are not changes from which new conclusions can be drawn. In general, the upward trend remains for the pound, and this is the most important thing. As in the case of the euro, the COT reports do not indicate that the upward trend is maintained, the key influence is the fact that trillions of dollars are currently being injected into the US economy, not due to behavior of large players. If you look at the first indicator, you can see how the red and green lines often intersect, which indicates that there is no clear idea in which direction to trade the pound at all! Now the green and red lines have moved away from each other, which formally means an upward trend. Therefore, based only on the COT reports, we can also assume further upward movement. However, we have already said that it will be very difficult for the pound to grow from a purely technical point of view, since this growth is already completely unreasonable. Although even if there is another couple of trillion dollars in the US economy, the pound will still be able to continue strengthening, despite the problems with the Northern Ireland Protocol, the Scottish issue, the weak recovery and a possible drop in GDP in the first quarter, the general decline economy due to Brexit and prospects that aren't that bright.
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.
