GBP/USD 5M
The GBP/USD pair was also trading quite calmly on Monday, but even here it was not without a sharp drop in quotes, as well as for the EUR/USD pair. The difference lies in the fact that there was no rapid upward pullback in the pound. And traffic was more versatile during the day. The bulls failed to surpass the critical Kijun-sen line twice, which rose to the level of 1.4167 during the day, and two rebounds from this line formed two sell signals. After the first of them, the quotes fell by 48 points, after the second - much less. In any case, the 1.4080 target level has not been met even once. However, it was still at a distance of 100 points, so a short position, at least the first one, could have been closed earlier. Still, hardly anyone expected the pair to fall by 100 points on Monday. But formally, both deals were closed by Stop Loss at breakeven. Thus, traders would only be able to make money according to our recommendations if they would have manually closed short positions. By the way, on the second deal, it was possible to make a profit even without various assumptions, since we do not recommend postponing deals overnight, therefore, in any case, profit should have been closed in manual mode. Bank of England Governor Andrew Bailey delivered a speech yesterday, who was supposed to deliver a report on monetary policy in Parliament. However, this event, which is marked with the number "1" in the chart, as we can see, did not cause any impact on the pound/dollar pair. And it happened in the late afternoon, when both trading signals were generated. Usually, no serious movements after the speeches of the heads of central banks in Parliaments happen, since Jerome Powell and Andrew Bailey usually just read a prepared text from a piece of paper. Roughly speaking, this is a simple formality. All the most important information of the chapters is voiced not before the Parliaments, but after the central bank meeting and sometimes between them. Moreover, even these events were not on the news calendar, which indicates their degree of significance.
Overview of the EUR/USD pair. May 25. How Joe Biden is saving the US economy and what it means for the dollar.
Overview of the GBP/USD pair. May 25. G7 countries can sign a corporate tax agreement by the end of the month.
GBP/USD 1H
The British pound began a new round of correction within the upward trend on the hourly timeframe and has reached the upward trend line today. The first attempt to overcome it failed, so a rebound was made, but the price also failed to settle above the critical line. And so, the pair is currently trading on the edge. If the quote crosses the critical line, then it will rush to the level of 1.4240 again, if the trend line is crossed, the probability of ending this trend will sharply increase. We continue to draw your attention to the most important levels and lines and trade from them: 1.4080, 1.4181 and 1.4240. Senkou Span B (1.4037) and Kijun-sen (1.4167) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. Today, representatives of the Bank of England are scheduled to speak again in the UK, this time it's Sylvana Tenreyro, who from time to time pleases traders with loud statements. But this still does not happen often. There are no other events scheduled for tomorrow. There are also only minor events in the United States.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 10 points during the last reporting week (May 11-17). In general, the pound continues to rise in price, which can clearly be seen in the chart above. Major players have resumed building up long positions since about December 2020. But at the same time, even according to Commitment of Traders (COT) reports, third-party global factors are clearly visible, which also support the pound. See for yourself. Until last December, when the upward trend in the pound continued, commercial and non-commercial traders did not really even know what to do with the pound. At that time, we recall, it was completely unclear how Brexit would end up and whether there would be a trade deal, and what awaits the UK in general. The red and green lines of the first indicator constantly crossed, which indicates the absence of a trend. But the pound was still growing. Therefore, even from this point of view, there is a serious imbalance in the money supply of Britain and the United States. Otherwise, the picture is as follows: neither the big players, nor the small ones bought the pound, but it grew anyway. It doesn't work that way. If market participants did not buy the pound, then it could grow only due to non-market factors, in particular, the intervention of the Federal Reserve and the Bank of England. Now the COT reports show that professional traders have started to buy the pound again, but they are not doing it very zealously. Rather, they try to simply follow the trend that is being formed without their much involvement. For example, a group of non-commercial traders closed 3,800 Buy contracts (longs) and 1,500 Sell contracts (shorts) during the reporting week. Thus, the net position for this group has decreased, which means that the bullish sentiment is weakening. It is this indication, not that the bearish mood has strengthened. The bears continue to rest now.
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.