GBP/USD - 24H.
The GBP/USD currency pair has grown by 130 points this week and is starting a new upward trend. We have already said repeatedly that from a global technical point of view, nothing has changed in recent months, as the pair continues to trade in the 600-point range between the levels of 1.36 and 1.42. It is not flat, but it is a side channel. The most remarkable thing is that the pair has fallen into the target area of 1.3600-1.3666, which we have repeatedly talked about, and everything looks as if it is still ready to start a new upward trend. Recall that the pound/dollar also had two rounds of correction against the global upward trend. And we also expect a resumption of the growth of the pound. And fundamental factors also speak in favor of the fall of the dollar. Therefore, the picture is approximately the same as for the euro/dollar pair. At the moment, the quotes have risen to the critical Kijun-sen line, so they will have to overcome this line if they want to continue moving up. Otherwise, the local downward trend will continue. As for Friday's speech by Jerome Powell, it had the same impact on the pound as on the euro. Thus, in general, we continue to believe that most factors point to the resumption of the campaign to the north, but everything will depend on the markets. For any fundamental hypothesis, technical confirmation is required.
COT report.
During the last reporting week (August 17-23), the GBP/USD pair fell by 120 points. And the number of contracts to buy from a group of "Non-commercial" traders during the same time decreased by only 2 thousand. However, the number of short positions increased by 19 thousand. Therefore, something has happened for the pound that has not yet happened with the European currency. The mood of large traders has officially changed to "bearish" since now they have more open sell contracts than buy contracts. It turns out that in the last reporting week, major players reduced their net positions in both the euro and the pound. Was it all due to the same expectations of "hawkish" rhetoric from Jerome Powell, which was not destined to be voiced? One way or another, but the British currency, according to COT reports, has much more interesting prospects for falling than the euro. However, all other fundamental and technical factors continue to speak in favor of the fall of the US currency and not vice versa. Therefore, we believe that at this time, we should rely on technical factors. For the pound, this is the area of 1.3600-1.3666. A confident overcoming of it will allow us to expect a further drop in the pair's quotes. However, since Jerome Powell did not report anything supporting the US dollar last Friday, it will be difficult for the US currency to count on a new round of strengthening. We also remind you that the "factor of the Fed's cash injections" continues to work not in favor of the dollar, which inflates the money supply and provokes an increase in inflation. In general, even with the readings of the COT reports, the further growth of the dollar is far from obvious.
During the current week, no single important report was published in the UK. In the United States, we can only note the GDP report for the second quarter, according to which there was an increase of 6.6% q/q, which is slightly higher than the previous estimate. However, although the pound/dollar pair was trading quite actively for 3 out of 5 days, we cannot conclude that this was due to macroeconomic statistics. Only Friday's fall in the US currency can be associated with the speech of Jerome Powell. And, for example, on Monday, the pound rose strongly, but on this day, only the business activity indices in the US and the UK were published, which turned out to be worse than the previous values. And in general, these are not the most important indicators. Thus, the pound/dollar pair is now trading more according to its own rules, and it pays attention to "macroeconomics" and "foundation."
Trading plan for the week of August 30-September 3:
1) The pound/dollar pair is still in a downward trend if we take the short-term plan of the 24-hour timeframe. Since the price continues to be located below the critical line, it is simply impractical to consider purchases now. Therefore, for the possibility of considering longs, you need to wait for a new price consolidation above the Kijun-sen line, after which the first target will be the Senkou Span B – 1.3908 line.
2) The bears again failed to overcome the level of 1.3600 last week, so their prospects also remain rather doubtful. It will be possible to continue to consider short positions below the Kijun-sen line and, especially when the price rebounds from this line, but we still expect the resumption of the upward trend more. As you can see, the pair did not manage to leave below the level of 1.3600 for six months.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. Take Profit levels can be placed near them.
Ichimoku indicators, Bollinger Bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced earlier.
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.