On the hourly chart, the GBP/USD pair continued its upward movement on Friday after bouncing off the support zone of 1.2584-1.2611 on Wednesday. A bounce of quotes from the Fibonacci level of 61.8% (1.2715) would favor the US dollar and a resumption of the decline towards the zone of 1.2584-1.2611. If the pair's rate solidifies above the level of 1.2715, it will increase the chances of further growth towards the resistance zone of 1.2788-1.2801. The sideways movement for the British pound continues, and neither the bulls nor the bears have the upper hand.
The wave situation remains very ambiguous. Trends are currently quite short-term, and we often see single waves. Trader sentiment remains bullish due to the lack of a drop in the British pound below the 1.2584 level. The last downward wave failed to break the 1.2611 level, around which the lows of all previous waves are located. Similarly, the last upward wave did not break the important zone of 1.2788-1.2801 for the bullish trend to develop. Thus, the sideways movement persists until the pair exits the zone of 1.2584-1.2801.
The information background on Friday could have been stronger in both the direct and figurative sense of the word. The UK's retail sales volume report was several times worse than traders' expectations, forcing the bulls to retreat from the market for a bit. However, in the second half of the day, the bulls returned to buying, leading to the British pound returning to the 1.2715 level. Monday started with a moderate rise, which is fully justified by the nature of the current movement. Since the movement is currently horizontal, the pair is trading between the zones of 1.2584-1.2611 and 1.2788-1.2801. The last zone worked as 1.2584-1.2611, so now we can expect growth towards 1.2788-1.2801.
On the 4-hour chart, the pair made a new rebound from the level of 1.2620 and a reversal in favor of the British pound. Thus, the growth process can be continued toward the Fibonacci level of 61.8% (1.2745). On the 4-hour chart, it is easy to see the horizontal movement between the levels of 1.2620 and 1.2745. There are no emerging divergences from any indicators today, and the quotes have left the ascending trend channel. The trend may continue to change to a bearish one, but this will take time and require significant efforts from the bears, particularly to close below the 1.2620 level.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category changed in favor of the bulls over the past reporting week. The number of long contracts in speculators' hands increased by 5546 units, while the number of short contracts decreased by 4651. The overall sentiment of major players changed to bearish several months ago, but currently, the bulls have a significant advantage again. There is an almost twofold gap between the number of long and short contracts: 66 thousand versus 35 thousand.
The British pound still has excellent prospects for a drop. Over time, the bulls will continue to unwind their buy positions, as all possible factors for buying the British pound have already been worked out. The rise we have seen over the past three months is a correction. The bulls last pushed below the 1.2745 level over a month ago. However, the bears are in no hurry to go on the offensive and cannot deal with the 1.2584-1.2611 zone.
News Calendar for the US and the UK:
On Monday, the economic events calendar contains only some important entries. The impact of the information background on the market sentiment will be absent today.
Forecast for GBP/USD and trader advice:
Selling the British pound is possible today in case of a rebound from the 1.2715 level on the hourly chart with a target of 1.2611. Buying the British pound was possible after the rebound from the zone of 1.2584-1.2611 with a target of 1.2715. This target has been reached. Today, buying with a target of 1.2788-1.2801 is possible after closing above the 1.2715 level.