GBP/USD 5M
The GBP/USD pair moved very weakly on July 28, which does not even look like it. However, such a weak movement on Wednesday partly confirms our hypothesis that a week ago, the pair sharply fell due to the worsening epidemiological situation in the UK, and then made an equally strong leap when the situation began to improve. Thus, at the moment, the pair has returned to the levels at which it was two weeks earlier, when the fourth wave of the pandemic in Great Britain was just beginning and did not cause concern to anyone. With regard to macroeconomic reports, the UK and the US did not publish any reports during the day, nothing important. It all came down to when the Federal Reserve meeting was summed up in the evening. As we already said in the article on the euro/dollar, we do not consider the evening movements of the pair, since by that time all intraday trading should have been stopped. Thus, it turns out that the pair formed only two signals during the day, and both should be ignored. There were several reasons for this. First, the pair practically did not move at night trading on Wednesday. This movement is the norm for the Asian trading session, however, the pound is usually traded more actively at night. Secondly, the European trading session was in full flat with a volatility of 33 points, which is very little for the pound. Thus, with the opening of the US session, and even on the eve of the announcement of the results of the Fed meeting, one should hardly expect a calm trend movement. Therefore, the consolidation of quotations below the extremum level of 1.3859 and the re-consolidation above this level should be ignored.
Overview of the EUR/USD pair. July 29. Whatever the final market reaction to the Fed meeting, the dollar is still at risk.
Overview of the GBP/USD pair. July 29. The stumbling block is the Northern Ireland Protocol.
GBP/USD 1H
The pound/dollar pair slightly corrected on the hourly timeframe during the day, which, however, did not break the upward trend. The results of the Fed meeting will be reviewed tomorrow, when it becomes known in detail what exactly Fed Chairman Jerome Powell said, how his rhetoric has changed and what decisions the Fed has made. However, in general, the pound continues to be in an upward trend, which fully meets our expectations. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3800, 1.3859, 1.3898, 1.4000. Senkou Span B (1.3737) and Kijun-sen (1.3806) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. On Thursday in the UK, as usual, there will be no important macroeconomic reports, and in the US, the volume of GDP for the second quarter will be known. The GDP report can provoke a new strong movement in the pound/dollar pair. Also, most of the day the markets may remain impressed by the Fed meeting and its results.
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 200 points during the last reporting week (July 13-19). The data from the latest Commitment of Traders (COT) reports fully support this development: the net position of non-commercial traders is falling, and the pound is also dropping. Thus, everything seems to be logical. However, the first indicator in the chart clearly shows that the upward trend is not ending, but that a new downward trend is about to begin. The green and red lines crossed, which already means a bearish mood of traders. Let us remind you that the green line is the net position of the "non-commercial" group, and the red line is the net position of the "commercial" group. Consequently, at this time, professional players have already opened a larger number of contracts for selling (short) than for buying (longs). And this suggests that major players believe in the further fall of the British currency. But here the same factor also works as for the euro/dollar pair. Trillions of dollars continue to flow into the American economy, which is why its rapid recovery is achieved. However, at the same time, the money supply is growing, inflation is rising, which depreciates the dollar much faster than the sales of the major players of the pound. Consequently, we are fully justified in expecting that the pound will also start to rise in price again, simply because inflating money supply in the United States is more global. During the reporting week, major players immediately opened 11,600 contracts for sale and closed 1,100 contracts for buy. Their net position decreased immediately by 12.7 thousand. Now they already have more open sell positions than buy ones. However, on all these actions of large players, the pound barely managed to get to the last local low, which was formed even when the mood of traders was bullish.
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.