GBP/USD 5M

The GBP/USD currency pair also traded rather well on Tuesday. At least it definitely did not stand in one place. Although the movement during the day was not as trendy as for the EUR/USD pair. Nevertheless, the signals were formed. Unfortunately, it is very difficult to understand why the pair bounced up in the afternoon. The euro continued to fall at the same time, and we expected, not without reason, that the euro and the pound would continue to show a high degree of correlation. However, the pound nevertheless began to grow, which was facilitated by the price rebound from the rising trend line on the hourly time frame. It was the trend line that saved the pound from a new powerful fall, but hardly for a long time. We believe that a new strength test will follow today, which the line will not withstand. It should also be noted that neither the US nor the UK had any macroeconomic statistics and "fundamentals" yesterday. Therefore, traders had nothing to react to during the day. The pound also retains weak chances for growth, but today the situation may change dramatically.

In fact, the situation with trading signals is quite complicated. The very first buy signal turned out to be false, and the price failed to move 20 points in the right direction. Therefore, there was a loss on this transaction. This was followed by a signal to sell, which allowed traders to earn, but a little later two false signals were formed at once in the area of 1.1974-1.1987. First, the pair bounced off the critical line, then overcame the level of 1.1974. The movement did not continue in the right direction neither in the first nor in the second case. However, at the same time, there was a rebound on the hourly timeframe from the trend line, so losses on these transactions could have been avoided, and the signal on the hourly timeframe should have been worked out, since it was more important and stronger. As a result, it was possible to earn about 30 more points on a long position, and in total the day ended in profit.

COT report:

The latest Commitment of Traders (COT) report on the British pound again showed insignificant changes. During the week, the non-commercial group closed 1,900 long positions and 3,700 short positions. Thus, the net position of non-commercial traders increased by 1,800. But what does it matter if the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above? And the pound, in spite of everything, still cannot show even a tangible upward correction? The net position has been falling for three months, now it has been slowly growing for several months, but what difference does it make if the British currency still continues to depreciate against the US dollar? We have already said that the COT reports do not take into account the demand for the dollar, which is probably still very high right now. Therefore, even for the strengthening of the British currency, the demand for it must grow faster and stronger than the demand for the dollar. The non-commercial group currently has a total of 89,000 shorts open and only 32,000 longs. The net position will have to show growth for a long time to at least equalize these figures. Neither macroeconomic statistics nor fundamental events support the UK currency. As before, we can only count on corrective growth, but we believe that in the medium term, the pound will continue to fall.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. July 27. Today - what everyone has been waiting for - the Fed meeting.

Overview of the GBP/USD pair. July 27. Rishi Sunak and Liz Truss held a pre-election debate. Truss won.

Forecast and trading signals for EUR/USD on July 27. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The British currency managed to stay above the trend line and maintain an upward trend on the hourly timeframe. Thus, for now, the pound retains chances for growth. However, overcoming the trend line for the pound and the lower border of the horizontal channel for the euro will open the way for both currencies down. We highlight the following important levels for July 27: 1.1807, 1.1874, 1.1974, 1.2033, 1.2106, 1.2175. The Senkou Span B (1.1901) and Kijun-sen (1.1988) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" 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. Again, no major events are scheduled for Wednesday in the UK. We also do not believe that traders will pay attention to the durable goods orders report on the day when the results of the Federal Reserve meeting are announced. In the evening, in fact, it will become known how much the US central bank will raise the rate.

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.