GBP/USD 15M
The lower linear regression channel turned to the upside on the 15-minute timeframe, while the higher one is still directed to the downside. On Wednesday, everything depended on the 1.3745 level and today, everything will also depend on this level. Either if the rebound is a new downward movement, or being able to surpass it would continue the upward movement. So far, everything is heading towards a new rebound.
GBP/USD 1H
The GBP/USD pair performed Thursday as we expected. First, the pair dropped to the support area of 1.3606-1.3626, then turned to the upside and rose to the 1.3745 level, which is a local high and at the same time a peak for the last 2.5 years. Thus, the upward trend is formally preserved, which we can clearly see, however, recently, the price still predominantly moves between 1.3630 and 1.3745. Thus, a kind of flat has formed for the pair, which can end at any moment with the resumption of the upward trend. The bears still have nothing to do with the pressure of the bulls. In yesterday's review, we recommended buying the pair if the price rebounds from the support area of 1.3606-1.3626 with targets at 1.3700 and 1.3745. The price did not reach this area by just three points, nevertheless, a rebound from this area was visible, there was no hint of overcoming it. Therefore, traders could open long positions, especially since, in the event of a pullback, the deal is opened just above the rebound level, and not below it. Both buy targets were met, which could bring traders up to 90 points of profit. We recommended selling the pound/dollar pair when the price rebounds from the 1.3745 level, which did not happen during the previous day.
COT report
The GBP/USD pair rose by 70 points during the last reporting week (January 12-18). It doesn't seem like a lot, but the growth is stable. But the latest Commitment of Traders (COT) report was disappointing again. Recall that over the past two to three months, the vast majority of reports indicated minimal changes. In most cases, professional traders tended to close contracts for the pound, both for buying and selling. Only the penultimate report showed that the number of buy contracts (longs) increased by 10,460 at once, which is a lot. The latest report showed that non-commercial traders have returned to their favorite pastime - a sluggish reduction in the number of contracts. 2,000 buy contracts and 3,100 sell contracts were closed. Thus, the net position for the "non-commercial" group of traders has become more bullish. However, the indicators show a completely different picture. While the numbers from the COT report could tell traders that the upward trend was maintained (and it is), the indicators show that the mood of non-commercial traders changes about once a month. The green line of the indicator (net position of the non-commercial group) constantly changes its direction of movement and intersects with the red line (net position of the commercial group), which, in fact, means that there is no trend. However, there is a trend, and the changes displayed by the COT report are minimal and do not allow any long-term conclusions to be drawn.
Thursday was an unremarkable day for the British pound, fundamentally wise. The UK has new epidemiological problems, which relate to the high death rate from the coronavirus. There is no talk of easing the lockdown yet. UK authorities will assess the results of all the measures taken by mid-February and, possibly, allow the quarantine requirements to be relaxed. However, this is still a long way off. The British GDP for the fourth quarter of 2020 will be announced, and it can very much disappoint traders. Although, of course, almost everything depends on the US dollar right now.
Friday's macroeconomic background will be very weak for the pound/dollar pair. No major publications in the UK, and only minor reports in the US. Thus, the main focus should be on the technical picture. Of course, sudden news can arrive at any time. For example, do not forget that Congress may approve a $1.9 trillion stimulus package, which, from our point of view, may cause a new long-term decline in the dollar.
We have two trading ideas for January 29:
1) The price left the rising channel, but the upward trend still persists. Therefore, you are advised to trade bullish when the price surpasses the 1.3745 level with targets at the resistance levels of 1.3776 and 1.3825. Take Profit in this case will be up to 60 points. You can also open long positions when the price rebounds from the Senkou Span B line (1.3632) or the resistance level 1.3635 while aiming for 1.3700 and 1.3745.
2) Sellers tried to start a new downward trend, but could not overcome the 1.3606-1.3626 area. Nevertheless, in case the price rebounds from the 1.3745 area, we recommend selling the pair again while aiming for support levels 1.3700 and 1.3635. Take Profit in this case will be up to 100 points. The downward movement is not a trend, so if you trade, then do so in small lots.
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.