GBP/USD 5M
The GBP/USD currency pair again showed growth on Wednesday, and I myself did not understand why, since there were no macroeconomic statistics that day. There was also no fundamental background, and the appointment of Rishi Sunak has long been won back by traders, if it has affected their mood at all. Thus, both European currencies are rising as if they are no longer affected by the geopolitical conflict in Ukraine, and both of their central banks are raising rates at every meeting with the Federal Reserve completely silent. Explaining the pound's growth is even more difficult than explaining the euro's growth, which at least has a meeting of the central bank this week. Thus, growth is purely technical, from which there are no less questions for it. We believe that such an unreasonable rise may either indicate that the market is now ready to buy the pound, no matter what (but why?), or that this is a false growth, after which a deeper fall will follow. Today can help answer that question.
In regards to yesterday's trading signals, the situation was almost perfect. The price rebounded from the extreme level of 1.1442 at the very beginning of the European trading session, after which it rose almost to the level of 1.1649, not even reaching it. Thus, long positions had to be closed manually in the late afternoon. Profit on them amounted to at least 150 points, and we congratulate traders.
COT report:
The latest Commitment of Traders (COT) report on the British pound showed a new growth in bearish sentiment. In the given period, the non-commercial group closed 8,600 long positions and opened 3,400 short positions. Thus, the net position of non-commercial traders fell by 12,900, which is quite a lot for the pound. The net position indicator has been growing slightly in recent weeks, but this is not the first time it has risen, but the mood of the big players remains "pronounced bearish" and the pound remains on a downward trend in the medium term. And, if we recall the situation with the euro, then there are big doubts that based on the COT reports, we can expect a strong growth from the pair. How can you count on it if the market buys the dollar more than the pound? The non-commercial group now has a total of 91,000 shorts and 40,000 longs open. The difference, as we see, is still very large. The euro cannot show growth if the major players are bullish, and the pound will suddenly be able to grow if the mood is bearish? As for the total number of open longs and shorts, here the bulls have an advantage of 25,000. But, as we can see, this indicator does not help the pound too much either. We remain skeptical about the long-term growth of the British currency, although there are still certain technical reasons for this.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. October 27. The euro's groundless growth as a reason to think.
Overview of the GBP/USD pair. October 27. The pound sterling is flying high but could fall deep.
Forecast and trading signals for EUR/USD on October 27. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair is trading very inadequately on the hourly timeframe. The price no longer changes the direction of movement five times a day, but at the same time, the growth looks even more strange than the "swing", since there are practically no grounds for it. Today's European Central Bank meeting may also affect the pound, as both major currency pairs continue to move almost identical to each other. On October 27, trading could be performed at the following levels: 1.1212, 1.1354, 1.1486, 1.1649, 1.1760, 1.1874. Senkou Span B (1.1179) and Kijun-sen (1.1347) lines can also be sources of signals. Signals can be bounces and breakouts of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on positions. Again, no important events or reports are scheduled for Thursday in the UK, but, as we have already said, the pound may react to the ECB meeting. In addition, the US will publish a report on GDP for the third quarter, and this figure may rise by 2.4-2.5% after two negative quarters. There will also be a report on orders for durable goods, which has a lesser degree of significance for traders.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
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 reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.
