GBP/USD 5M

The GBP/USD currency pair traded ultra calmly on Monday. The volatility was low, only 52 points. The movements are measured and slow. If signals were formed at the same time, it would be practically a paradise for traders. However, not everything is so simple. First of all, it should be said that the macroeconomic statistics that were published yesterday in the UK had no effect on the pair's movement. Of course, business activity indices are not the most important indicators of the state of the economy. Moreover, they did not present any special surprises. The business activity index for the service sector has grown significantly, but it was not "negative" before. In general, these data were ignored. And there was no other data. And in general, there will be little news on macroeconomics this week. The geopolitical theme will remain in the focus of the market.

Now as for trading signals. There were practically none during the day. The first one was formed only in the US trading session, when the price broke the level of 1.3609. However, the price could not continue its downward movement and for several more hours it traded exactly "at the level" of 1.3609. Thus, the traders had enough time to close the deal for short positions. The second trading signal was formed when the trading day was almost over. It definitely should not have been worked out.

COT report

The latest Commitment of Traders (COT) report on the British pound showed an increase in bullish sentiment among professional traders. For the first time in several months, the number of long positions from the non-commercial group exceeded the number of short positions, so we can assume that the annual downward trend is over. In principle, the situation with COT reports on the pound is very similar to the situation on the euro. There, too, major players are increasing long positions, but at the same time the euro continues to be very close to its annual lows and in fact is not growing. But the pound, as we have repeatedly said, shows a smaller drop against the dollar and is growing more confidently. At the moment, it is at a much greater distance from its annual lows, so we believe that if there is a new fall, the pound will fall less than the euro. If there is a new growth, the pound will grow stronger than the euro. This is now explained by the fact that against the background of the planned multiple increases in the Federal Reserve's key rate in 2022, the European Central Bank simply refuses to raise its rate, and the Bank of England has already raised it twice. Thus, due to this discrepancy in the rates for tightening monetary policy, the pound occupies a more advantageous position in comparison with the euro currency. Moreover, non-commercial traders have just recently been bearish about the pound, which is eloquently shown by the green line of the first indicator or the second indicator in the chart above. However, it is over the past couple of months that their mood has become much more bullish.

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GBP/USD 1H

The technical picture on the hourly timeframe has not changed over the past day. It's still the same "swing". If you look at the higher timeframe, the situation is called "flat". The price has been between the levels of 1.3489 and 1.3637 for several weeks. Although this channel is not the narrowest, nevertheless the price cannot leave it. At the moment, the pair is near the upper limit of this channel, so there is a high probability of a new fall in the British pound. On February 22, we highlight the following important levels: 1.3439, 1.3489, 1.3572, 1.3637, 1.3667, 1.3741. The Senkou Span B (1.3564) and Kijun-sen (1.3563) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels on the chart that can be used to take profits on transactions. There are no important events and publications scheduled for Tuesday in the UK. Therefore, all attention should be paid to the indices of business activity in the manufacturing and services sectors in the United States. However, this is now secondary data. All the attention of the market will now be focused on the Ukrainian-Russian conflict, as Russian President Vladimir Putin signed a decree recognizing the independence of the LPR and the DPR...

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.