GBP/USD 5M
The GBP/USD pair moved about the same way as the EUR/USD pair on Wednesday. That is, in a narrow horizontal channel, which is clearly visible. The upward movement began only towards the end of the day. The horizontal channel's range was 47 points. Thus, not only the euro/dollar pair cannot boast of strong movements. The pound/dollar pair also stood in one place for almost three days. For the GBP/USD pair, there was the same single macroeconomic report as for EUR/USD. And it also had no influence on the course of trading. Likewise, the pound/dollar pair spent almost the entire day near the extreme level, crossing it every couple of hours. As a result, four trading signals were generated at once near the same level with a volatility of 47 points. "Ideal conditions" for trading. However, let's analyze the trading signals and understand which trades should have been opened. Traders could work out the first signal - a rebound from the level of 1.3725 - with a short position. However, the downward movement did not last long and soon the price settled above the level of 1.3725, where it was necessary to close short positions and open long positions. However, the upward movement did not last long. The quotes of the pair dropped below the level of 1.3725 closer to the US trading session, so the long position should have been manually closed. In total, a loss of about 20 points was received for these two deals. Unfortunately, we see such a nature of the trading of both currency pairs, when it is very difficult to count on good movements and strong signals. The last two signals should have already been ignored, since the first two turned out to be false. And after four false signals, the pair nevertheless began to move up, but it should not have been worked out, since it was already too late.
Overview of the EUR/USD pair. 26 August. Robert Kaplan, Coronavirus and Jackson Hole
Overview of the GBP/USD pair. 26 August. Brexit aftermath: McDonald's ran out of milkshakes
GBP/USD 1H
The pound/dollar pair has settled above the downward trend channel on the hourly timeframe and stood in one place for quite a long time, having managed to overcome the Senkou Span B line only by Wednesday evening. Thus, after breaking the Senkou Span B line, the upward movement will continue, but at any moment the pair can go to a new flat. Strictly speaking, it is very difficult to find the reasons why the pair rose 60 points in the afternoon. While this movement may not be strong, it clearly stands out against the backdrop of those movements that we saw on Tuesday and most of Wednesday. We continue to draw the attention of traders to the most important levels and recommend trading from them: 1.3601, 1.3677, 1.3747, 1.3785 - 1.3794. Senkou Span B (1.3745) and Kijun-sen (1.3673) 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, August 26, the only report of the day that, at least in theory, will be able to provoke a market reaction, will be the report on GDP for the second quarter in the United States. We believe that this report is highly likely to be ignored by the markets. No important information is expected from the UK.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair did not lose or gain a single point during the last reporting week (August 10-16). Moreover, if you look at the chart above, you can clearly see that there is no downward trend at this time. There is a correction, and the correction ends sooner or later. According to the latest Commitment of Traders (COT) reports, the major players were not very active, but still reduced their net position (green line of the first indicator). And commercial traders, on the contrary, increased it. This suggests that the upward trend is coming to an end, but at the same time, the data of the COT reports for the pound is very inaccurate, since at the time when the pound grew by those 2,800 points, which we have already mentioned, professional traders did not always increase long positions. It was on the basis of this fact that we concluded that the factor of the Federal Reserve's infusion of trillions of dollars into the US economy has a greater influence on the British currency exchange rate, which inflates the money supply and provokes inflation. Moreover, in the last few weeks, the group of non-commercial traders has been increasing buy contracts/longs (the green line rises, the second indicator rises). Thus, the bullish sentiment among the major players is strengthening again. Consequently, the pound may start to rise in price again. Changes were minimal during the reporting week. In total, professional traders have closed 2,700 buy contracts and less than 500 sell contracts. Thus, the net position decreased by 2,500. However, such changes are insignificant for the British currency. In general, now between the purchases and sales of the pound at "non-commercial" is almost complete equilibrium.
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.