GBP/USD 15M
Both linear regression channels turned to the downside on the 15-minute timeframe. However, this does not mean anything particularly important, since it continues to move erratically. Yesterday we advised you to trade from the Senkou Span B and Kijun-sen lines, but in the end even this plan failed. The pair is still moving unconventionally and it is difficult to predict.
GBP/USD 1H
The GBP/USD pair continues to move erratically on Thursday. Recall that at the end of the previous week and at the beginning of the current quotes, the pound unexpectedly collapsed by 300 points followed by a recovery by 250 points, and then it fell by 250. Moreover, it is still impossible to connect all this with the fundamental background. In fact, the pound/dollar pair continues to move near 2.5-year highs, while being extremely overbought, but at the same time it cannot start a new downward trend. This speaks to the bears' weakness, and they still refuse to enter the market. As a result, a "triangle" of two trend lines, rising and falling, was formed for the pair. At the moment, the price is near its lower line, so we can expect it to be overcome, as well as further downward movement, so that it would be very logical. Someone may even say that now the usual trend movement, but even the Kijun-sen and Senkou Span B lines have merged, and the price overcomes them without much difficulty. All this speaks in favor of the fact that we continue to witness the high volatility swing.
COT report
The GBP/USD pair did not grow and did not fall by a single point during the last reporting week (November 24-30). There were no price changes during this period. But in general, there was still an upward trend that extended into the following week. If in the case of the euro/dollar pair, we had been waiting for the beginning of a new downward trend, in the pound/dollar pair's case, the Commitment of Traders (COT) reports did not allow such conclusions to be drawn. You only need to look at both indicators in the chart to understand that there is no trend in the mood of major players. The first indicator constantly shows a shift in the mood of commercial and non-commercial traders from bearish to bullish and vice versa. The second indicator constantly shows that the net position of the "non-commercial" group is growing and decreasing. That is, we can not draw conclusions regarding the pair's future from the COT reports. Non-commercial traders opened 3,600 new Buy-contracts (longs) and closed 4,400 Sell-contracts (shorts) during the reporting week. The net position immediately increased by 8,000, which is a lot for the pound. But there were no price changes. The number of open Buy and Sell contracts for the non-commercial group is practically the same.
The fundamental background for the British currency was interesting enough on Thursday, but only at first glance. The dollar strengthened at the end of the day, but the macroeconomic reports from the UK were not a failure. Industrial production in October increased by 1.3% m/m, although the forecast was only +0.3%. Second, GDP in October grew by 0.4% m/m, in full accordance with forecasts. Thus, the pound did not deserve to fall by 100 points. But the report on US inflation turned out to be quite good and was able to restrain dollar purchases. And apparently Boris Johnson and Ursula von der Leyen did not agree on anything, but at the same time negotiations on the trade deal will continue, at least until Sunday. Judge for yourself whether this news can be considered positive or negative for the British currency.
No major events or reports scheduled for the UK on Friday. One should not even expect any results from the negotiations, since the parties announced their extension until Sunday, which means that it makes no sense to wait for any information before December 13. Therefore, you should trade exclusively on the basis of the technical picture. The key point now is the bottom line of the triangle. Overcoming it will make the bears feel more confident.
We have two trading ideas for December 11:
1) Buyers for the pound/dollar pair tried to regain the initiative yesterday, but their attempts were not enough. They need to return the pair above the resistance area of 1.3394-1.3402 and the downward trend line, and only after that will you be able to count on an upward movement while aiming for the resistance level of 1.3556, which is very far away. Take Profit in this case will be up to 90 points. In this case, the pair is still moving erratically, which has been going on for several weeks, if not more. Each trader decides for himself whether to trade in such conditions.
2) Sellers seem to have made a tangible step towards a new downward trend, but so far, the rising trend line restrains them from moving down. We recommend selling the pound/dollar pair while aiming for the support area of 1.3160 -1.3184 and the 1.3054 level if the quotes settle below the trend line. Take Profit in this case can range from 50 to 170 points.
Forecast and trading signals for EUR/USD
Explanations for illustrations:
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.