GBP/USD 5M
The GBP/USD currency pair moved very ambiguously and unconventionally on Monday. Although we expected a calmer and more measured movement on it, since no important reports or events were planned in the UK and the United States. Nevertheless, technical signals managed to change the main direction of the pair's movement four times during the day. And the main direction was upward, as the pair adjusted after falling last week. And a week earlier, too. However, the resistance area expressed by the Kijun-sen line and the levels of 1.3439 and 1.3451 was too strong for the bulls, and the price could not overcome this barrier. The price bounced off this area four times, forming sell signals. Each time it went down from 17-30 points. Therefore, traders could count on such a small profit on Monday. Moreover, the movements themselves were rather ragged. The price often changed direction, which is always bad for traders. In general, Monday was not the most successful day for trading. However, this week there will be much more interesting days that can both change the trend and arrange such a "roller coaster", which has not been for a long time. The thing is that the Bank of England is likely to raise the key rate again, but at the same time this factor is still almost the only one supporting the pound's growth. Therefore, on Thursday we are waiting for the pair to grow, but on other days...
COT report
The latest Commitment of Traders (COT) report on the British pound signals only one thing: the end of the downward trend. Thus, we can at least conclude that the downtrend is nearing its end. The green line of the first indicator (the net position of the "non-commercial" group) first moved to zero from top to bottom, therefore it went much below the zero mark, and now it has returned to it. In addition, in recent weeks, the green and red lines have been moving towards each other, which signals the end of the trend. In our case, a downward trend. Thus, even if the British pound continues to fall to the previous low, the trend may still end in the near future. Or, COT reports should again begin to indicate an increase in the bearish mood among professional traders. At the moment, COT reports suggest that the mood of the major players remains bearish, but "minimally bearish", so to speak. The trend is now to strengthen the bullish intentions. Thus, we now expect the pound to fall to the level of 1.3162, but this round of decline may be the last.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 1. The European economy: failure, failure and failure again.
Overview of the GBP/USD pair. February 1. Boris Johnson will use the tensions in Eastern Europe to his advantage.
Forecast and trading signals for EUR/USD on February 1. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair as a whole maintains a downward trend on the hourly timeframe. The first trend line could not resist the bulls' onslaught, but the growth was stopped by the critical Kijun-sen line, and the trend line has just been broken, but not overcome. Therefore, it is far from a fact that the upward movement will continue in principle until the Bank of England meeting. To continue it, it is necessary to confidently overcome the Kijun-sen line. We highlight the following important levels on February 1: 1.3276, 1.3362, 1.3439, 1.3489. The Senkou Span B (1.3590) and Kijun-sen (1.3441) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. Only one release is scheduled for Tuesday in the UK – the index of business activity in the manufacturing sector. It is unlikely that this report will have a strong impact on the pair's movement. A more significant ISM index for the manufacturing sector will be published in the United States, but its value should differ from the forecast in order to provoke a market reaction. Volatility on Monday was low (lower than in the euro currency). It can remain the same on Tuesday.
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.