GBP/USD 5M
The GBP/USD pair traded even more ugly than the EUR/USD pair on Wednesday. Unfortunately, this is the case. What can we say about the pair's movement if during the most active period of the day it passes about 60 points, changing the direction of movement five times? The most surprising thing is that today these movements even managed to work out and, perhaps, even get a small profit. In total, two sell signals were generated during the day. The first one was formed at the very beginning of the European trading session, when the price bounced off the critical line. After that, the pair went down about 25 points, which was not enough to reach the nearest target level - the Senkou Span B line. After that, the pair returned to the Kijun-sen line, and the deal closed at breakeven. After that, another sell signal followed, also in the form of a price rebound from the critical line, but the price failed to reach the Senkou Span B line even in the evening, so this short position did not close in profit. Moreover, it most likely also closed on the Stop Loss at breakeven, because during the downward movement after the second sell signal was formed, the price rolled back up by as much as 36 points. Thus, it was possible to make a profit on this short position only if traders opened it at the level of 1.4159 or higher. In this case, it should be manually closed in the evening near the Senkou Span B line, which would bring a profit of about 40 points. But again, the signals today were unclear, and the deals were ambiguous. It all depended on the skill of the traders. Also, no important reports were published during the day. The calendar of macroeconomic events was empty for the third day in a row. Moreover, it is not clear why the direction of the pair's movement changed five times during the day! But the pound as a whole continues to trade unpredictably, and the nature of its movement is clearly visible on the hourly timeframe.
Overview of the EUR/USD pair. May 27. Say a word about poor inflation...
GBP/USD 1H
The British pound fell into the horizontal channel of 1.4100-1.4220 on the hourly timeframe, which is still not very similar to the horizontal channel. At the same time, if in the last 5-7 days the pair was trading in the range approximately between the Senkou Span B line and the level of 1.4228, then yesterday the trading was already between the Senkou Span B line and the Kijun-sen line, that is, in the 60-point range. And a couple of days ago, the pair overcame the rising trend line, but a downward movement did not begin. The bears also failed to settle below the Senkou Span B line. In general, the movement is now as confusing and ambiguous as possible. We continue to draw your attention to the most important levels, of which there are very few now, and trade from them: 1.4080 and 1.4240. There are also levels of 1.4101 and 1.4219, but they almost duplicate the levels listed above. The Senkou Span B (1.4112) and Kijun-sen (1.4167) lines can also be sources of signals, but they are very weak in the flat. And now, it seems, there is a flat. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction of 20 points. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching for trading signals. Once again, no major macroeconomic events scheduled for Thursday in the UK. On the other hand, the fundamental picture will be more upbeat in America, as several important reports will still be published, but they are unlikely to cause a strong market reaction. But still, you should not skip the moment when these reports are released.
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.