Analysis of GBP/USD 5M.
The GBP/USD currency pair moved just fine on Friday. As we have repeatedly said, trend movement is the best thing that can be on the market. And on Friday, exactly such a movement was observed. It started early in the morning and lasted almost all day. There were no important reports or other events in the UK during the day. They were only in the USA, where important reports on Nonfarm and unemployment were published. Both turned out to be stronger than forecasts, with much more. Therefore, the further growth of the dollar after their publications does not cause any surprises. And of course, where without the factor of geopolitics. The pound continues to remain in the risk zone due to this factor and, unfortunately, can continue to fall only based on it alone.
There were only two trading signals during the day. Last night, the price bounced off the critical line with an error, and at the time of the opening of the European session, it moved away from this line by only a few points. Therefore, the sale deal could be opened already at the opening of Europe. In the future, the price moved only down, and at the beginning of the American session, it overcame the level of 1.3273, forming another sell signal. Therefore, those traders who for some reason did not open a deal in the morning could do it in the afternoon. The profit, of course, in the second case was much less, but it is, in any case, a profit. The deal should have been closed manually in the late afternoon.
COT Report:
The latest COT report on the British pound showed an increase in bullish sentiment among professional traders. And a week earlier - the strengthening of the "bearish" mood. In general, the mood of the major players changes too often, which is seen by the two indicators in the illustration above. At the moment, the net position of the "Non-commercial" group is near zero, which means a "neutral" mood. The same conclusion is confirmed by the absolute data on the number of open contracts. There are 51 thousand of them for purchase now, and 50 thousand for sale. That is almost complete equality. Moreover, since July last year, professional traders have not been able to decide where to trade the British pound. Only in December, there was a serious strengthening of the "bearish" mood, which led to a significant drop in the UK currency. The rest of the time, the players cannot decide in the medium term what to do with the pound. Therefore, the absence of a strong fall in the British pound partly corresponds to the COT reports. However, we still believe that COT reports are not the best tool for forecasting right now. At a time when the whole world is increasing demand for the dollar as a reserve currency, we can expect growth of this particular currency, despite any data from COT reports. This is exactly the picture we are seeing now in the euro currency, where purchases are growing, and the currency itself is falling at the same time. Thus, geopolitics remains in the first place in terms of importance.
Analysis of GBP/USD 1H.
A downward trend is also visible to the naked eye on the hourly timeframe. At this time, there is still no trend line or channel, as the movement is "ragged" and unstable. Collapses happen from time to time, but most of the time the pound tries to stay afloat. Thus, today the pound may try to win back some of Friday's losses. But in general, geopolitics will continue to put pressure on it. On March 7, we highlighted the following important levels: 1.3170-1.3185, 1.3273, 1.3367, 1.3439. The Senkou Span B (1.3457) and Kijun-sen (1.3319) lines can also be signal sources. Signals can be "bounces" and "surmounts" 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. Also in the illustration, there are support and resistance levels that can be used to fix profits on transactions. There are no major events or publications scheduled for Monday in the UK and the US. Thus, during the day, traders will be able to pay attention only to geopolitical news. We believe that today there is a high probability of a correction, especially for the pound, since we remember that this currency is getting cheaper against the dollar much less willingly than the euro.
Explanations to the illustrations:
Price levels of support and resistance (resistance/support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.