GBP/USD 5M

The GBP/USD currency pair, if not increased, then at least did not fall on Thursday. A small decline was nevertheless observed, but it cannot even be called a correction within an upward trend, which has been forming for several weeks now. The ascending trend line remains relevant and there is no point in considering short positions until the price settles below it. Therefore, the pound, oddly enough, retains good chances for further growth, despite the US central bank's 0.75% rate hike, Fed Chairman Jerome Powell's hawkish comments. However, we remind you that the Bank of England will hold a meeting next week, at which the rate may also be raised and also, very likely, by a value above 0.25%. So now the pound can grow "in advance". At least, we do not see any other grounds for the pound's growth. It should also be noted that the pound's growth may end quite quickly, because sooner or later traders will win back the future increase in the BoE rate. And on the basis of what then will the pound grow? Rhetorical question...

There were few trading signals on Thursday, but almost all of them were extremely unsuccessful. Three signals were formed at the European trading session, and two of them turned out to be false. The first two signals, which made it impossible to work out the third, which just turned out to be strong. Therefore, traders could first open a long position, then sell and get a total loss of about 40 points. However, the last fourth signal, which was already formed near the level of 1.2106, was already strong and at least slightly allowed to win back the losses of the European trading session. The price did not reach the level of 1.2175 quite a bit, so the long position had to be closed manually in the late afternoon. Profit on it could be 10-20 points, so we managed to partially offset the loss. However, the profit on the euro definitely covered the loss on the pound.

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 29. The euro rose after the Fed meeting, only to fall the next day.

Overview of the GBP/USD pair. July 29. The British pound, after all, maintains an upward trend and is waiting for the BoE rate hike.

Forecast and trading signals for EUR/USD on July 29. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pair maintains an upward trend on the hourly timeframe and is ready to continue rising. We are still skeptical about the pound's growth, but before the BoE meeting, it can really rise in price. Then, most likely, the fall will resume, as almost the only factor supporting the pound will be offset. However, let's not get ahead of the locomotive. It is better to trade in accordance with the existing technical picture. We highlight the following important levels on July 29: 1.1874, 1.1974, 1.2033, 1.2106, 1.2175, 1.2259, 1.2342. Senkou Span B (1.1911) and Kijun-sen (1.2058) 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. No major events scheduled for Friday again in the UK. Thus, today traders can pay attention only to secondary reports in the US, such as the consumer sentiment index from the University of Michigan.

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.