GBP/USD 5M

The GBP/USD currency pair has started a new week "to rest". The pound fell by 110 points, although there were no new reasons and grounds for such a movement. There was not a single interesting event in the UK or the US during the day, and Boris Johnson's resignation is unlikely to affect the mood of the market, as the euro is also falling into the abyss at the same time. Thus, we believe that geopolitics and foundations remain the main factors behind the fall of European currencies, which we analyze in more detail in our fundamental articles. As for the pound, no new conclusions can be drawn from Monday. The currency fell again, does this surprise anyone? The currency fell again for no particular reason. The currency is heading towards its all-time lows since at least 1995, located near the 14th level. Nothing new. This week, the only really important event will be the US inflation report, but even that does not absolutely guarantee at least some growth for the British pound. Moreover, most of the forecasts again indicate an increase in the growth rate of prices overseas.

In regards to trading signals, the situation on Monday was very good. Let's start with the fact that the first signal was formed at night and it could be tried to work out with the opening of the European trading session, since by that time the price had not gone far from the formation point. However, even if traders did not do this, a new sell signal formed within a few hours when the price broke the extreme level of 1.1974. And after a couple of hours - rebounded from the same level. Therefore, there were plenty of opportunities to open short positions. As a result, the pair fell to the level of 1.1874, which made it possible to make a profit on the transaction worth at least 70 points. The buy signal near the level of 1.1874 should no longer be worked out, since it was formed too late.

COT report:

The latest Commitment of Traders (COT) report again showed insignificant changes. During the week, the non-commercial group opened 4,400 long positions and 7,500 short positions. Thus, the net position of non-commercial traders decreased by 3,100. 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 fell for three months, then grew for several weeks, but what's the difference if the British currency is still depreciating? 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 now has a total of 96,000 shorts open and only 39,000 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 fall of the pound will continue.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. July 12. Report on US inflation may provoke a new growth of the dollar.

Overview of the GBP/USD pair. July 12. The British pound is dreading the US inflation report.

Forecast and trading signals for EUR/USD on July 12. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

On the hourly timeframe, the British pound completed the formation of a new correction very quickly and resumed its downward movement. We also formed a descending trend line for better visualization of what is happening in the market. Now traders need to overcome the local low of 1.1874 and the pound can continue to fall. And there will be absolute lows not far from that area, on which it has definitely not been for more than 30 years. We highlight the following important levels on July 12: 1.1874, 1.1974, 1.2106, 1.2175. The Senkou Span B (1.2105) and Kijun-sen (1.1967) 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 are no major events or publications scheduled for Tuesday in the UK and US. We, at least, do not consider Bank of England Governor Andrew Bailey's evening speech as such, who rarely pleases the markets with important statements. Thus, traders will have nothing to react to during the day, which does not mean a guaranteed immobility of the pair.

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.