GBP/USD 5M

Yesterday, the GBP/USD currency pair tried to continue the correction that began the day before, but failed to settle below the critical Kijun-sen line. Thus, despite overcoming the ascending trend line, which had a rather large angle of inclination, the pound maintains a short-term upward trend. It will now be possible to talk about a new decline for the British currency if the pair settles below the critical line. During the past day, there was not a single important publication in the UK, and in the States - only a report on orders for durable goods, which turned out to be weaker than forecasts and provoked a slight fall in the dollar. However, this fall was also due to a rebound from the Kijun-sen line. In general, the technical picture of the pound/dollar pair has not changed over the past day. Now only the trend line is no longer relevant or will require rebuilding in the coming days.

As for trading signals, it was formed only once on Wednesday. The price fell to the extreme level of 1.2496 at the end of the European trading session and rebounded from it very inaccurately. Traders could well open short positions at first, as consolidation below this level was deep enough. Therefore, it will assume that a short position was opened first, and then a long position. In this case, the first trade resulted in a loss of about 15-20 points. The second deal had to be closed manually in the late afternoon and the profit on it was at least 35-40 points. That is, at the end of the day

COT report:

The latest Commitment of Traders (COT) report on the British pound showed almost no change. During the week, the non-commercial group closed 2,800 long positions and 3,200 short positions. Thus, the net position of non-commercial traders increased by only 500. The net position has been falling for three months already, which is perfectly visualized by the green line of the first indicator in the chart above. Or the histogram of the second indicator. The non-commercial group has already opened a total of 106,000 shorts and only 26,000 longs. Thus, the difference between these numbers is already more than four times. This means that the mood among professional traders is now "pronounced bearish" and this is another factor that speaks in favor of the continuation of the fall of the British currency. Note that in the pound's case, the COT report data very accurately reflects what is happening on the market: the mood of traders is "strongly bearish", and the pound has been falling against the US dollar for a very long time. We do not yet see specific signals for the end of the downward trend, however, usually a strong divergence of the red and green lines of the first indicator signals the imminent end of the trend and the beginning of a new one. Therefore, the conclusion is that an upward trend may begin in the near future, but it is dangerous to try to catch its beginning at the lowest point. The pound may well demonstrate another round of decline before it starts to grow.

We recommend that you familiarize yourself with:

Overview of the EUR/USD pair. May 26. Christine Lagarde: The EU must learn important lessons from the military conflict in Ukraine.

Overview of the GBP/USD pair. May 26. The Fed's rhetoric remains hawkish, meanwhile the pound is correcting and hopes for new growth.

Forecast and trading signals for EUR/USD on May 26. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

It can be seen on the hourly timeframe that the pair has settled below the trend line, but the upward trend still remains relevant until the prices settles below the Kijun-sen. The pound, like the euro, continues to grow solely on the technical factor with little support from macroeconomic statistics. But this does not change the essence of the matter. Today we highlight the following important levels: 1.2259, 1.2405-1.2410, 1.2496, 1.2601, 1.2674. Senkou Span B (1.2339) and Kijun-sen (1.2483) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" 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 trades. There is nothing interesting on the calendar of events for Thursday in the UK. On the other hand, the US will publish a report on GDP for the first quarter in the second assessment. It is this report that will be the main event of the day, and everything will depend on how the second assessment differs from the first. The pound will continue to rise if the US economy contracts by more than 1.4% Q/Q.

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.