GBP/USD 5M
The GBP/USD pair moved with a slight decrease on September 6. The volatility of the pair was about 50 points. For the pound, this is about the same as for the euro currency - 30 points. This is the least amount of volatility. We can say that the pair stood in one place all day. It is good that not a single line or level was worked out or overcome. Otherwise, traders could face scattered trading signals. And all of them would be false, which promised big losses. No single important event or publication in either the UK or the US on Monday, so there was nothing for traders to react to either. Thus, at this time, we can only draw the attention of traders to the fact that the upward trend persists in the long term, and the US dollar is still under pressure from fundamental and technical factors. Recall that NonFarm Payrolls and Federal Reserve Chairman Jerome Powell did not support the dollar, so now the probability of curtailing the QE program following the results of the September meeting of the Fed has greatly decreased. And for the dollar, this was almost the only chance for a new strengthening.
Overview of the EUR/USD pair. Two speeches by Christine Lagarde are key events of the week.
Review of the GBP/USD pair. Andrew Bailey's speech after a long pause may affect the pound rate.
GBP/USD 1H
The GBP/USD pair, as we expected, dropped to the critical line as part of the correction against the upward trend on the hourly timeframe. The pair's quotes continue to be within the rising channel, so the trend has not been canceled. A price rebound from the lower border of the channel or the Kijun-sen line may provoke a resumption of the upward movement with targets at 1.3886 and 1.3921. Moving below the channel will lead to a change in the downward trend. We continue to draw the attention of traders to the most important levels: 1.3747, 1.3785 - 1.3794, 1.3886, 1.3948. Senkou Span B (1.3704) and Kijun-sen (1.3810) lines can also be signal sources. 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. Nothing interesting planned in the UK on September 7. There will be speeches by several members of the Bank of England Monetary Committee, but such events rarely trigger strong moves in the foreign exchange market. Even if Katherine Mann or Michael Saunders report something important, the reaction to it will be weak, and it is completely impossible to predict what Bank of England representatives may say now. Thus, most likely, weak volatile movements await us again today. Markets are likely to focus on the speech of BoE Governor Andrew Bailey, which is scheduled for tomorrow. It is not a fact that we might hear anything important there, but Bailey has not spoken for a long time and the markets have the right to expect important and new information from him. Especially on monetary policy and the possible collapse of QE.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair gained 35 points during the last reporting week (August 24-30). The most important group of non-commercial traders continues to reduce their net position, and their mood is becoming increasingly bearish. These changes are clearly visible on the indicators in the chart above. The first indicator clearly shows that the green line (net position of the "non-commercial" group) has already gone below the zero level. Simply put, the mood of the major players turned bearish at this point. You can also see that in the last six months the red and green lines (net positions of the "commercial" and "non-commercial" groups) only moved towards each other, which means the end of the current trend (in our case, an upward trend). However, in fact, we still cannot conclude that the upward trend is over, due to too weak a correction against this trend. It is the weakness of the correction over the past six months that does not allow us to conclude that this is the beginning of a new trend, and not just a correction. Thus, major players continue to sell off the pound, while the currency itself could not even go below the target area of 1.3600-1.3666 after three attempts. Therefore, we believe that in the first place in terms of importance remains the factor of infusion of hundreds of billions of dollars into the US economy by the Fed, which ensures the dollar's depreciation in the long run and does not allow it to strengthen too much in the short term. Non-commercial traders closed 2,500 buy contracts (longs) and almost 5,000 sell contracts (shorts) during the reporting week. Thus, the net position even slightly increased, but this does not change the essence of the matter. So far, the major players are bearish, but this does not help the pound/dollar pair to continue moving below 1.3600.
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.