GBP/USD 5M
The GBP/USD pair moved much less actively on October 5 than in the last couple of weeks. Volatility of the day was only 65 points, which is very little for the pound. Now it is very clear that with an empty calendar of macroeconomic events, traders no longer find new reasons to trade actively. Last week, we recall that a fuel crisis flared up in the UK, which caused the pound to initially drop by 300 points against the dollar, and then, when the situation began to improve, the pound rose by more than 200 points. So now we are witnessing the ending of the pound's recovery. No, the upward movement may continue, but not on the basis of the topic of the fuel crisis in the UK. Moreover, the pair crossed the descending trend line at the hourly TF. If you look at the 5-minute TF, you can clearly see that only two signals were formed today, both for long positions. The price initially broke through the levels 1.3601 and 1.3607, and then bounced off them. In both cases, traders could enter long positions. The first long position should have been closed at zero profit, since the price went up only 25 points, which was enough to set Stop Loss to breakeven, at which the trade was closed. The second long position was to be manually closed in the late afternoon. The Stop Loss should also have been set at breakeven for it, but it did not work. In the evening, the deal was in profit of about 25 points, which should have been taken. I would also like to say separately that macroeconomic statistics on Tuesday also had no effect on the pound/dollar pair. The UK services PMI was ignored. The ISM index of business activity in the US provoked the strengthening of the dollar by 10 points.
GBP/USD 1H
The pound/dollar pair continues an upward correction on the hourly timeframe, but now it is above the downtrend line, so we can say that the downward trend has reversed. In this case, traders can now look to the pound to start a new upward trend. Let us remind you that we have been expecting exactly this development of events for a long time, but in recent months the dollar has been gravitating towards growth. Nevertheless, the current technical picture signals that the upward movement may continue, at least to the level of 1.3432, which is near the previous local high. We distinguish the following important levels on October 6: 1.3519, 1.3570, 1.3601 - 1.3607, 1.3732. Senkou Span B (1.3610) and Kijun-sen (1.3531) 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. The UK will release a report on business activity in the construction sector on Wednesday. This report is, as they say, "10 points of reaction." It is hardly worth waiting for a stronger movement of the pair after it. The ADP report will be published in the United States and, according to forecasts, the value will grow by the end of September from 374,000 to 455,000. However, we would like to remind you that the trends for Nonfarm and ADP rarely coincide. That is, the ADP report may show a strong increase in the number of employees, and the Nonfarm report may fall short of the predicted values. Thus, if the ADP report does not have a strong deviation of the actual value from the forecast, then the market reaction is unlikely to be strong either.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
Major players slightly strengthened their bullish mood during the last reporting week (September 21-27). Although it is now as neutral as possible in fact. The fact is that the value of the net position for the non-commercial group of traders is now around zero, which means equality between the number of open long and short positions in the pound. Consequently, neither bulls nor bears have the initiative. Moreover, in the last couple of months, the mood of professional traders has been constantly changing, as the net position is either increasing or decreasing. Thus, from our point of view, the conclusion is obvious: the COT reports do not indicate either bullish or bearish sentiment now. During the reporting week, changes in the non-commercial group were minimal. 5.5 thousand Buy contracts (longs) and 4.5 thousand Sell contracts (shorts) were opened. Thus, the net position of non-commercial traders increased by 1,000. If in the case of the European currency, the COT reports signal a very likely further fall, then in the case of the pound, the COT reports just indicate the neutral mood of traders. The picture above shows a clear downward trend, but the problem is that professional players do not continue selling the British currency. Consequently, further decline is not evident for the pound. Take note that the euro corrected by about 43% against the upward trend, and the pound - by 24%.
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.