Analysis of GBP/USD, 5-minute chart
The GBP/USD currency pair also tried to correct on Friday, but failed to even reach the Kijun-sen line. The pound retains excellent chances for continuing the upward movement, as we have said more than once. Technical analysis speaks in favor of the pound now. Its rapid and powerful growth from the lows of the year suggests that we are dealing not with a banal upward correction, but with a new trend. Friday showed us that the market is ready to buy the pound, however, as in the case of the euro, this week the mood of traders can change dramatically. If the Federal Reserve meeting will be interesting for the euro, then in the pound's case, it has the Bank of England meeting. And we also have the NonFarm Payrolls report to look forward to on Friday, so this week almost every day can bring surprise and extra volatility. The British currency on the 24-hour timeframe has not yet managed to overcome the Senkou Span B line, but if anyone is able to continue to grow now, it is the pound.
The situation with Friday's trading signals on the 5-minute timeframe was as simple as possible. The price never approached any level or line for the entire day, therefore, not a single signal was formed. It was not necessary to open positions, and this week you need to be cautious, as strong movements and sharp price reversals are possible as a result of a strong fundamental background.
COT report:
The latest Commitment of Traders (COT) report on the British pound showed a slight weakening of the bearish sentiment. In the given period, the non-commercial group opened 3,200 long positions and closed 200 short positions. Thus, the net position of non-commercial traders increased by 3,400, which is very small for the pound. The net position indicator has been growing slightly in recent weeks, but this is not the first time it has risen, but the mood of the big players remains "pronounced bearish" and the pound remains on a downward trend in the medium term. And, if we recall the situation with the euro, then there are big doubts that based on the COT reports, we can expect a strong growth from the pair. How can you count on it if the market buys the dollar more than the pound?
The non-commercial group now has a total of 91,000 shorts and 43,000 longs open. The difference, as we see, is still very large. The euro cannot show growth if the major players are bullish, and the pound will suddenly be able to grow if the mood is bearish? As for the total number of open longs and shorts, the bulls have an advantage of 18,000 here. But, as we can see, this indicator does not help the pound too much either. We remain skeptical about the long-term growth of the British currency, although there are still certain technical reasons for this.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. October 31. Crazy start of the week for the euro.
Overview of the GBP/USD pair. October 31. Crazy week for the British pound!
Outlook and trading signals for EUR/USD on October 31. Analysis of market situation.
Analysis of GBP/USD, 1-hour chart
The pound/dollar pair maintains an upward trend on the hourly timeframe, which so far looks quite convincing. The price is located above all important lines, and the upward movement is supported by the trend line. However, there are so many important events and reports this week that it is impossible to predict where the pair will end up by the end of the week. We do not rule out the dollar's growth, but it needs to be very strong to break the current trend. On October 31, trading could be performed at the following levels: 1.1212, 1.1354, 1.1486, 1.1649, 1.1760, 1.1874. Senkou Span B (1.1277) and Kijun-sen (1.1450) lines can also give signals if the price rebounds or breaks these levels. The lines of the Ichimoku indicator may move during the day, which should be taken into account when determining trading signals. Also, there are support and resistance levels that can be used to lock in profits. No major events are scheduled for Monday in the UK and the US, so traders will have nothing to react to today. But still, the market may start to move very volatilely today, as two meetings of central banks may prompt it to react in advance.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.
