GBP/USD 5M
The GBP/USD pair continued its upward movement on Wednesday, which had begun the day before. Unlike the EUR/USD pair, it left the horizontal channel and continues to trade quite actively, which is even somewhat strange given the festive status of this week. However, we have already said that the market is "thin" during the holidays, so the likelihood of weak volatility is high, but not 100%. The pound is currently up to the high, which was reached after the Bank of England raised its key rate. At the moment, the pair has rebounded from the level of 1.3362, but it may try to overcome it again. In addition to the macroeconomic statistics from overseas, which we talked about in the EUR/USD article, yesterday there was also a report on the UK GDP in the third quarter and not in the first estimate. It turned out that GDP began to decline and is no longer + 1.3% q/q, but + 1.1% q/q. Thus, from our point of view, this report was also ignored, as it was supposed to provoke a fall in the pound, not its rise. Thus, it remains only to consider the trading signals of the day. It should be noted right away that the pair's movement was excellent yesterday. For most of the day, the movement was one-way and practically without pullbacks and corrections. The first buy signal was formed when the pair crossed the Senkou Span B, Kijun-sen lines and the extremum level of 1.3276. All these lines and level should be considered as a single area of resistance. Long positions were opened, and they should have been closed already near the extremum level of 1.3362, from which the pair rebounded and thus formed a sell signal. As a result, the long position made it possible for 67 points to be earned. The sell signal was formed quite late, so it shouldn't have been worked out anymore.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair came out of the horizontal channel and rose to the important level of 1.3362. There is still no trend at this time, so a new round of downward movement to the level of 1.3185 may begin today. However, if the 1.3362 level is crossed, it will be a serious step towards the formation of a new upward trend. We distinguish the following important levels on December 23: 1.3170-1.3185, 1.3276, 1.3362, 1.3406. Senkou Span B (1.3266) and Kijun-sen (1.3268) lines can also be signal sources. Signals can be "rebounds" and "breakthroughs" of these levels and lines. 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. No interesting events or publications scheduled for Thursday in the UK, and only minor reports in the US. Thus, traders can continue to trade in pure "technique", showing their true desire for the pound/dollar pair, practically without the influence of "foundation" and "macroeconomics".
We recommend you to familiarize yourself:
Overview of the EUR/USD pair. December 23. The euro is already celebrating and only the news about the Omicron does not allow the market to fall asleep completely.
Overview of the GBP/USD pair. December 23. Boris Johnson refused to introduce a lockdown and the pound surged.
Forecast and trading signals for EUR/USD for December 23. Detailed analysis of the movement of the pair and trade deals.
COT report
The mood of commercial traders was much more bearish during the last reporting week (December 7-13). Commercial traders closed 6,700 sell contracts (shorts) and 20,100 buy contracts (longs) during the week. Thus, the net position for the "non-commercial" group of traders decreased by 13,400 contracts, which is a lot for the pound. Thus, unlike the euro currency, the pound, according to COT reports, continues to fall quite reasonably: major players continue to sell it. However, the green and red lines of the first indicator (which mean the net positions of the non-commercial and commercial groups) have already moved far away from each other. Recall that such a deletion signals the imminent end of the trend. However, as with any fundamental assumptions, specific technical signals are required to work out this hypothesis, which are not currently available. If we do not take into account the increase in the key rate by the Bank of England, then there are no special fundamental reasons for the growth of the pound now either. Recall that Prime Minister Boris Johnson continues to get into various scandals in Great Britain and there is already talk that he will leave his post before the end of the deadline. The pandemic in the UK is gaining momentum and the other day an anti-record was set for the daily number of infections. Omicron is also spreading quite rapidly across the country, creating additional risks for the healthcare system and the economy. London, on the other hand, cannot find a common language with Paris and Brussels, which threatens it with the deterioration of relations with its closest neighbors and the loss of markets for the sale of products. But there is no positive news.
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.