GBP/USD 5M
The GBP/USD pair moved very well on August 6, too, although there was an outright flat during the European trading session. However, traders were saved by the critical line of Kijun-sen, which acted as the upper support for the entire movement on Friday. Simply put, the price bounced off this line several times and never managed to settle above it. Thus, several sell signals were formed during the day and everything was near the Kijun-sen line of the Ichimoku indicator. Traders could enter the market by any signal, since they, in fact, were no different from each other. However, we will consider the signals in turn. Thus, short positions should have been opened in the European trading session. Since before the last sell signal was formed, the price could not go down 20 points, the Stop Loss order was not placed on a short position and every time the price returned to the critical line, the short position simply had to be kept open. In the end, it all came down to the US trading session and reports on unemployment and the number of new jobs created outside the agricultural sector. At this point, traders could still set Stop Loss slightly above the critical line in order to protect themselves from losses in case overseas reports turned out to be weak. However, this did not happen and it was after these reports that the downward movement began. True, it cannot be called strong, since only the pound/dollar pair went down by about 60 points, which is less than the euro/dollar pair. That is, for the GBP/USD pair, volatility was weak on Friday, despite strong reports. This was followed by a breakthrough of the extremum level of 1.3886, but the quotes could not go down to the next target level of 1.3800. Thus, the short position had to be closed manually in the late afternoon. The profit on it was about 45 points.
Overview of the EUR/USD pair. August 9. NonFarm Payrolls provide unexpected support to the US dollar.
Overview of the GBP/USD pair. August 9. Will the pound wait for the euro to complete the correction? Is the British economy growing fast?
GBP/USD 1H
The pound/dollar pair has already canceled the upward trends twice on the hourly timeframe, but the downward movement still cannot begin. Even Friday's downward movement raises more questions than answers. First, the price failed to drop significantly below its previous local lows. Secondly, the downward movement was even weaker than the downward movement of the euro/dollar pair, which indicates an outright reluctance of traders to sell the pound. Thus, even despite the cancellation of the upward trend, we would say that we are unlikely to see a strong downward movement this week. In technical terms, we continue to draw the attention of traders to the most important levels and recommend trading from them: 1.3800, 1.3886, 1.3981, 1.4000. Senkou Span B (1.3836) and Kijun-sen (1.3908) 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. On Monday, neither the UK nor the US will publish a single important report, nor will there be a single important fundamental event. Thus, trading decisions will have to be made only on the basis of technical signals. We would like to say that volatility may decrease today, but it was already low on Friday.
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.