M5 chart of GBP/USD
GBP/USD traded flat on Monday as well, although last week it had shown at least some movement. However, Monday was a holiday, and volatility rose in the evening, which gives us hope to see at least some kind of movement. But because of a complete absence of the fundamental and macroeconomic background, it will be difficult to expect a trend or high volatility. But at least there's still some kind of movement. I expect the pound to continue the downward movement on the one-hour chart, which is a part of the global correction at the higher time frames. In our fundamental articles, we discuss why this movement makes sense at the moment.
Naturally, there were no trading signals yesterday, and the pair showed about 30 pips of volatility and did not even approach any level or line. Therefore, you shouldn't have entered the market yesterday.
COT report
The latest COT report showed a decrease in bearish sentiment. During the given period, non-commercial traders opened 3,200 long positions and closed as many as 16,800 short positions. Thus, the net position grew by about 20,000, which is a lot for the pound. This figure has been on the rise for several months. Nevertheless, sentiment remains bearish, and GBP/USD is on the rise for no reason. I assume that the pair may well resume the downtrend soon since there is a need for at least a correction. Notably, both GBP/USD and EUR/USD now show practically identical movement. Since the net position is not even bullish yet, buying may continue for a few months to come. Non-commercial traders now hold 40,800,000 short positions and 35,200 long ones. The gap between them is small. I am still skeptical about the pound's long term growth, though there are technical reasons for it. At the same time, fundamental and geopolitical factors signal that the currency is unlikely to strengthen significantly.
H1 chart of GBP/USD
On the one-hour chart, GBP/USD is still trading below the lines of the Ichimoku indicator and it just reached the critical Kijun sen line on Monday night, from which it bounced. You can acknowledge the rebound as a sell signal, so expect the pound to fall. On Tuesday, the pair may trade at the following levels: 1.1760, 1.1874, 1.1974-1.2007, 1.2106, 1.2185, 1.2259. Senkou Span B (1.2265) and Kijun Sen (1.2093) lines may also generate signals. Pullbacks and breakouts through these lines may produce signals as well. A Stop Loss order should be set at the breakeven point after the price passes 20 pips in the right direction. Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. In addition, the chart does illustrate support and resistance levels, which could be used to lock in profits. There are no important events in the UK and the US, so there will be nothing to react to for today. I believe that we will continue to see a flat, but the downward bias also persists, so GBP could move down.
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.
