Analysis of GBP/USD 5M.
The GBP/USD currency pair traded on Friday for most of the day in the same way as the EUR/USD pair. The movements were almost identical. Unfortunately, most of the day's trading took place near the level of 1.3082, so a lot of false signals were formed around it. On this day, there were important macroeconomic statistics in the UK, but given the fact that the pair moved exactly like the euro/dollar, it is hardly possible to conclude that the market has worked out these statistics. Nevertheless, reports on GDP and industrial production in the UK turned out to be stronger than forecasts and could provoke a rise in the pound. But when these reports were published, the pair just started a new round of decline, so there was still no reaction. The same is true with the consumer sentiment index from the University of Michigan. Although its value was below forecasts, the dollar was already growing at that time and was not going to complete this process.
As already mentioned, there were a lot of trading signals. Traders could only work out the first two. They turned out to be frankly false, and the price could not pass even 20 points after their formation in the right direction. Therefore, even Stop Loss traders could not set. Consequently, a small loss was received on these transactions. But traders did not have the opportunity to win back this loss on Friday, since all other signals were no longer of any value. But, on the other hand, it cannot be profitable every day. Recently, the pair has been showing a strong trend movement, so traders could have already made very good money on it.
COT Report:
The latest COT report on the British pound showed an increase in the "bearish" mood among professional traders. However, in general, the mood of major players has changed too often in recent months, which is seen by the two indicators in the illustration above. At the moment, the number of open purchase contracts is less than the number of sale contracts by 13 thousand. Although a week ago their numbers were almost the same. We can conclude that the major players cannot now decide on exactly how to trade the pound. Of course, with the beginning of the military operation in Ukraine, a lot has changed for traders and investors. There was outright panic in the markets for several days. But even now, when enough time has passed to calm down, the markets are still excited. In addition, strong demand for the US dollar also affects the movement of the pound/dollar pair, so COT reports do not always reflect what is happening in the market. Although the reports on the British pound are at least a little consistent. The green line of the first indicator (the net position of the "Non-commercial" group) indicates that the major players are starting to look at the sales of the British pound again. And since this line is not far from the zero mark, the pound sterling has a lot to go down. In general, now most factors speak in favor of the growth of the US currency, and COT reports are just one of them. At this time, geopolitics is the most important factor.
Analysis of GBP/USD 1H.
On the hourly timeframe, the pair maintains a downward trend, which is eloquently signaled by the downward trend line. The price last week did not even try to work it out or overcome it. Thus, the trend remains quite strong and it is supported by 80% due to complex geopolitics. Macroeconomic statistics now play almost no role. On March 14, we highlighted the following important levels: 1.3082, 1.3194, 1.3273, 1.3367. The Senkou Span B (1.3259) and Kijun-sen (1.3115) 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 is not a single important event scheduled for Monday in either the UK or the US. Thus, today the market will have nothing to react to. But this does not mean that there will be no movement. Over the weekend, the situation in Ukraine has not improved, so today the British pound may continue to fall.
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.