GBP/USD 5M
Yesterday, the GBP/USD pair also passed from a low to a high of about 80-90 points, but at the same time, about half of this movement fell during the Asian session, during which we do not recommend trading. In general, the pound also continues to rise in price against the dollar. We have already talked about the reasons many times in our fundamental articles. We recommend that you familiarize yourself. There was only one signal that was formed on Tuesday - to buy - in the form of surpassing the extreme level of 1.4181. However, after its formation, the price went up only 30 points, which was enough to set the Stop Loss level to breakeven, but not enough to make a profit. Thus, the deal was closed at breakeven. Moreover, it was not necessary to open it at all, since the signal was formed in the morning just when UK reports began to be published. Yesterday we assumed that there wouldn't be a strong reaction to the reports, and it is not known whether the market eventually reacted to the reports. The fact is that before British data was published, the pound/dollar pair was already in an upward movement. Therefore, it is possible that it just continued, and reports have nothing to do with it. However, take note that the British reports were quite positive, as the unemployment rate fell, the number of applications for unemployment benefits decreased by 15,000 instead of growth. Signals that deserve the attention of traders were no longer generated during the day. The pair returned to the level of 1.4181 for the third time towards the end of the trading day, but failed to work it out for the third time.
GBP/USD 1H
You can also clearly see on the hourly timeframe how the pair continues its upward movement within the upward trend, which continues to be supported by the uptrend line. The price surpassed the first resistance level for this week at 1.4179 and could not go below it yesterday. And so, the pound continues its upward movement, which is completely inconsistent with the fundamental background from the UK, but the reasons for the pound's growth are different now. We recommend that you familiarize yourself with the fundamental reviews. Thus, we continue to pay attention to the most important levels and lines and trade from them: 1.4080, 1.4181 and 1.4240. Senkou Span B (1.3982) and Kijun-sen (1.4111) lines can also be signal sources. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. The UK will publish a fairly important report on the inflation rate for April. According to analysts' forecasts, the consumer price index will grow by 1.4% y/y, which may cause a reaction from market participants, since the value of the previous month was 0.7% y/y. However, it is really difficult to say what kind of reaction this report will cause. Take note that the rise in inflation is generally negative for the currency. However, the last two reports on US inflation have caused quite the opposite reaction, although in both cases there was an increase.
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 210 points during the last reporting week (May 4-10). Last Friday, traders got rid of the dollar because of the weak Nonfarm report, on Monday - by inertia. It was these two days that played the greatest role. Starting in January 2021, professional traders began to try to keep the main trend, since before that they constantly changed their strategy of working with the pound. The first indicator in the chart shows that the red and green lines began to move away from each other approximately in January, which indicates a new trend, which in our case is in fact the old trend of 2020. Nevertheless, the "non-commercial" group is currently raising its net position, increasing purchases of the pound, which look absolutely groundless from a fundamental point of view. But what if the pound is growing, and non-commercial traders are just aiming at making money from the exchange rate difference? During the reporting week, 15,000 Buy contracts and 6,000 Sell contracts were opened for the pound. Consequently, the net position increased by 9,000 contracts. The total number of open buy-positions is now 68,000, and Sell at 38,000. The difference is almost twofold, which indicates a moderate bullish mood of professional players. As in the case of the euro currency, we draw attention to the fact that at this time more global factors than the actions of large players, which usually set the direction of the trend, overlap the data of Commitment of Traders (COT) reports. However, COT reports now also speak in favor of continued growth in the British currency.
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.
