GBP/USD 5M
The GBP/USD pair traded almost identical to the EUR/USD pair on Wednesday. Market participants made it clear from the very morning that they were not going to make important trading decisions until the moment when the results of the Federal Reserve meeting were announced, and so the pair was in a flat for almost the entire day. As usual, nothing interesting happened during the Asian session. Quotes just moved sideways. Traders were slightly active when the European session opened, and they even managed to get the pair to settle above the Senkou Span B and Kijun-sen lines, but within an hour it became clear that the pound/dollar pair would be trading flat as well as the euro/dollar pair. For half a day, quotes simply moved along the Senkou Span B and Kijun-sen lines, completely ignoring them, which is another sign of a flat. Therefore, it was not worth opening any trade deals here. Those who still opened trades had the opportunity to close them at a minimal loss, since the price was constantly in the same range. Traders finally began to show signs of life when the US session opened. And take note that a rather paradoxical phenomenon happened, which may be a simple coincidence, but everything turned out very beautifully. After the flat, the pair dropped to the extremum level of 1.3857 and, having rebounded from it, began a strong upward movement. The most interesting thing is that the formation of this technical signal coincided in time when the results of the Fed meeting were announced, with an accuracy of five minutes. Thus, traders should have been out of the market at this time. However, those who took long positions on the rebound from the 1.3857 level could have earned up to 60 points in profit. On the way up, the Kijun-sen line and the extremum level of 1.3946 were surpassed, thus, formally, even now, traders can be in long positions. However, in the last few hours, of course, the pair is flat again as the US trading session closed. In general, trading was rather unusual on Wednesday, so if traders were out of the market, that's okay too.
GBP/USD 1H
On the hourly timeframe, you can clearly see that the pair as a whole continues to be within a wide horizontal channel, limited by levels 1.3809 and 1.3998. Thus, there is no need to talk about a trend now. The upward movement from last night is just a reaction to the Fed meeting. It does not change anything for the pair's technical picture. The price has come close to the extremum level of 1.3998 and there is a high probability that it will rebound from it or turn down without even reaching it. Today's fundamental background for the pound will be even stronger than yesterday. The Bank of England meeting will be summed up today, while Fed Chairman Jerome Powell will deliver a speech. Thus, sharp price reversals and an increase in volatility at certain moments are also possible on Thursday. Be careful! All technical signals formed during the day, no matter how strong they are, can be covered by the fundamental background and canceled. In general, we continue to recommend trading from important levels and lines, when rebounding from them and surpassing them. As before, you are advised to set the Stop Loss level at breakeven when the price passes 15-20 points in the right direction. The nearest level/line is always used as targets.
COT report
The GBP/USD pair fell by 100 points during the last reporting week (March 2-8). Despite the fact that the pound has been falling in the past two weeks, hardly anyone can now conclude that the upward trend is over. In principle, everything is clearly visible in the chart above. Moreover, just in the last 5-6 weeks, professional traders have been actively buying the pound. This is evidenced by the green line of the first indicator, which reflects the change in the net position of the group of non-commercial traders. At the same time, the Commercial group is increasing sales contracts. And this behavior of the two main groups of traders is the main sign of a strong trend. Thus, we see the strongest uncorrelation of the two main pairs. If the euro has been correcting for two and a half months, the pound has not. If the COT reports on the euro indicate a weakening of the bullish sentiment, then the COT reports on the pound - they say the opposite. Thus, the main thing now is not to try to assume that the pound and the euro will move in the same way, as is often the case. Unfortunately, there are no unambiguous factors as to why the euro and the pound are moving differently now. After all, if they do not correlate, this means that there are now global factors that have a strong impact on one or another currency in the eurozone or the UK. One negative is now coming from the UK, but the pound is growing much stronger than the euro. Could there be a problem in the eurozone? But we don't really receive much disappointing news from over there. Well, is it worth saying that the euro and the pound did not react in the same way to the growth factor in the yield of US Treasuries? Thus, in general, we believe that the COT reports for the pound unambiguously speak in favor of continuing the upward movement.
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.