GBP/USD 5M
The GBP/USD pair traded outside this universe on November 4. The volatility of the pair was 230 points, and the movement was almost one-way. Naturally, with such a movement, signals were formed, and they were quite strong. However, during the day, there were also several important fundamental events that should definitely be taken into account. For example, the UK PMI for the construction sector came out in the morning. Despite the fact that it turned out to be higher than forecasted, the British currency continued to fall. The results of the Bank of England meeting were announced exactly at the opening of the US trading session (figure "2" in the chart), which we discussed in detail in the fundamental article on the pound. After that, the fall of the pound intensified, and the speech of BoE Governor Andrew Bailey only finished off the pound. Thus, the "foundation" was very strong. It remains only to figure out how the pair should have been traded on Thursday. The first trading signal to sell was formed near the extremum level 1.3667 in the form of a rebound. Therefore, traders had to open short positions. Subsequently, the price dropped to the support level of 1.3619 and bounced off it. Therefore, at this moment it was necessary to close short positions (profit of 28 points), but it was possible to do otherwise. Since the announcement of the BoE results was to take place in a few hours, it was possible to "take risks without risk". That is, set Stop Loss to breakeven (it should have been set anyway) and hope that the pound will continue to fall. As you can see, as a result, the fall continued, and the price broke through the levels of 1.3607, 1.3601, 1.3570, 1.3519. It was an ambiguous decision, but there was no risk, but the potential profit could be many times greater. Even if traders exited the short position before the BoE meeting, then upon the signal to overcome the level of 1.3570, they should have shortcut the pair again. After that, the price went down another 80 points and below the level of 1.3519 it was necessary to exit the deal. Another 52 points could have been earned on this trade. Thus, in the worst case, the profit was 80 points. The best is 149 points.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair tried to continue moving down for about a week, but it succeeded only yesterday, thanks to the BoE. Despite the fact that the results of its meeting cannot be called dovish, a powerful fall in the pound followed, and the downward trend with a weak trend line continued. Now we can expect a round of corrective movement. On November 5, we distinguish the following important levels: 1.3416, 1.3519, 1.3570, 1.3601 - 1.3607, 1.3667. Senkou Span B (1.3737) and Kijun-sen (1.3636) 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. There will be nothing interesting in the UK on Friday, except for the speeches of several BoE members, who are unlikely to say anything new after BoE Governor Andrew Bailey. Thus, all attention should be paid to the Nonfarm report for October. The US dollar has grown very strongly over the past day and, if the report turns out to be strong (above the forecast of 397,000), it may rise even more. Although the correction is now still the preferable option for the development of events. However, volatility today may be high again. The main thing is that the movements themselves are no worse than yesterday. Then you can make good money.
We recommend you to familiarize yourself:
Overview of the EUR/USD pair. November 4. Macroeconomic statistics and Christine Lagarde's speech.
Overview of the GBP/USD pair. November 4. Ahead of the Bank of England meeting.
Forecast and trading signals for EUR/USD for November 4. Detailed analysis of the movement of the pair and trade deals.
COT report
The mood of professional traders became more bullish during the last reporting week (October 19-25). The situation with the COT reports is now even more ambiguous than with the technical picture. And if we compare the COT reports for the euro and the pound, the situation becomes even stranger. Both indicators in the chart above show that the major players still do not have any clear, precise and understandable mood. Consequently, it simply does not make sense to make any forecasts based on COT reports now. The chart above clearly shows the pair's entire movement over the past six months. It is rather difficult to call it a trend or even a trend. The mood of the big players has been constantly changing in the last couple of months. The green and red lines of the first indicator (net positions of groups of traders "commercial" and "non-commercial") are constantly changing the direction of movement, constantly crossing the zero mark. This means that the two largest groups of traders are constantly increasing and decreasing their net positions. During the reporting week, professional traders opened 2.8 thousand buy contracts (longs) and closed 10.7 thousand sell contracts (shorts). Thus, their net position increased by 10,000 contracts. This is in line with what has been happening with the pound in recent weeks (it is growing). Nevertheless, it is impossible to make a long-term forecast, since the net position may fall already by the end of next week. Especially considering the fall of the pound itself on Friday.
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.