GBP/USD 5M
The GBP/USD pair was trading in a very chaotic manner on Monday, April 26th. Yesterday we assumed that it could trade in a "swing" mode on the 4-hour timeframe, but in reality the swing was observed even on the 5-minute timeframe. Thus, the nature of the pound's current movements makes us advise you not to work with this pair for a while, because it brings mostly losses at this time. Let's analyze today's deals and see what could have been done. The first thing that catches your eye is the inaccurate development of the Kijun-sen line. The price seemed to have settled above it, but was unable to continue moving down. The price seems to have settled below this line, but at the same time it returned back to it in an hour. In total, the pound/dollar pair changed direction of movement on Monday at least six times. A false buy signal immediately formed near the critical line, which brought 18 points of loss, then a false signal to sell, which brought 16 points of loss. Then, it was no longer necessary to trade from the Kijun-sen line, since two false signals are no joke. But after that, false signals continued to form around the extremum level of 1.3886. It is good that the report on durable goods orders in the US was supposed to come out around this time, therefore, when any signal was processed, a sharp reversal could occur, therefore, there was no need to work on growth when rebounding from 1.3886. The same applies to the sell signal for surpassing 1.3886, which also turned out to be false. Thus, it was dry luck that no trades should have been opened here. Of course, one should not have traded from the 1.3886 level, especially since the pair returned to this area and started to move around it altogether. Thus, it is a very unlucky day for traders, erratic movements for the pound/dollar pair, losses. Perhaps, you should not trade the pair for a few more days in order for it to come to its senses.
GBP/USD 1H
The technical picture on the hourly timeframe still requires no explanation. The upward trend is maintained thanks to a weak uptrend line, and a rebound from it provoked an upward movement that was not too strong. Unfortunately, the pound continues to move in a swing mode on the 4-hour timeframe, and now on the lower time frames as well. Therefore, despite the fact that the technique can now expect the resumption of the upward movement, it is quite possible that the pair will continue to fall by another 150 points, breaking the trend line. The price surpassed 1.3886 several times on Monday, so we are deleting it from our list of important levels for now. Will pay attention to the most important levels and lines on Tuesday. The most important levels for today are 1.3945 and 1.3835. The Kijun-sen (1.3915), Senkou Span B (1.3839) lines and the trend line are also important as signals can also form around them. As before, you are advised to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The nearest level/line is always used as targets (exceptions - if the target is too close to the signal). There are no major events scheduled for Tuesday, April 27 in the UK, meanwhile, we only have an indicator of consumer confidence in the US, which is unlikely to cause a strong market reaction. We would also advise you to stop trading at the slightest sign that the swing would proceed on the 5-minute timeframe.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 200 points during the last reporting week (April 13-19). As for the Commitment of Traders (COT) report, the latest results did not show any significant changes in the balance between buy and sell contracts for the group of non-commercial traders. Non-commercial traders opened 10,500 Buy-positions (longs) and 8,200 Sell-positions (shorts) during the reporting week. Thus, their net position slightly increased by 2,300 contracts, and the sentiment became a little more bullish. However, these are not changes from which new conclusions can be drawn. In general, the upward trend remains for the pound, and this is the most important thing. As in the case of the euro, the COT reports do not indicate that the upward trend is maintained, the key influence is the fact that trillions of dollars are currently being injected into the US economy, not due to behavior of large players. If you look at the first indicator, you can see how the red and green lines often intersect, which indicates that there is no clear idea in which direction to trade the pound at all! Now the green and red lines have moved away from each other, which formally means an upward trend. Therefore, based only on the COT reports, we can also assume further upward movement. However, we have already said that it will be very difficult for the pound to grow from a purely technical point of view, since this growth is already completely unreasonable. Although even if there is another couple of trillion dollars in the US economy, the pound will still be able to continue strengthening, despite the problems with the Northern Ireland Protocol, the Scottish issue, the weak recovery and a possible drop in GDP in the first quarter, the general decline economy due to Brexit and prospects that aren't that bright.
Explanations for the chart:
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.