Analysis of GBP/USD, 5-minute chart
The GBP/USD currency pair also continued its downward movement on Monday after soaring to 1.1645 last week. We have said before that we expect the US dollar to rise ahead of the Federal Reserve meeting. As you can see, so far everything is going according to plan. Do not forget that the results of the Bank of England meeting will be announced on Thursday, but it is only in second place in terms of importance after the Fed meeting. Thus, the market is still busy working out the rate hike in the US, which will be announced tomorrow. The pound still retains great chances for succeeding growth. It pulled back less and is well above the Senkou Span B, but it also failed to clear the Ichimoku cloud on the 24-hour timeframe. Given the fact that the euro and the pound should move at least approximately the same, we assume that the British currency will continue to fall, at least until Wednesday.
The pair's movement on the 5-minute timeframe was almost perfect yesterday, as the quotes only declined throughout the day. Unfortunately, we did not catch the beginning of this movement, and during the day not a single trading signal was formed at all. Therefore, it was not possible to make money yesterday, and positions should not have been opened.
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. November 1. The EU economy is in a tailspin.
Overview of the GBP/USD pair. November 1. Elections in the UK will soon take on the character of an annual national tradition.
Outlook and trading signals for EUR/USD on November 1. Analysis of market situation.
Analysis of GBP/USD, 1-hour chart
The pound/dollar pair is moving upwards on the one-hour chart, which so far looks quite convincing. The price went only slightly below the Kijun-sen line, which is not critical yet. However, Wednesday and Thursday can dramatically change the situation for the pair. Today we expect the dollar to rise, but it is rather difficult to say where the pound will end up on Friday. On Tuesday, the pair may trade at the following levels: 1.1060, 1.1212, 1.1354, 1.1486, 1.1649, 1.1760, 1.1874. Senkou Span B (1.1351) and Kijun-sen (1.1535) 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. The UK is set to publish an index of business activity in the manufacturing sector S&P. The index is likely to remain below the level of 50.0, and the reaction to it may be, but weak. The more important ISM PMI will be released in the US in the afternoon. If the result significantly deviates from the predicted value, then the market reaction may be noticeable.
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.
