On the hourly chart, the GBP/USD pair continued its upward movement on Monday after bouncing from the support zone of 1.2584–1.2611 last Wednesday. The pair's consolidation above the level of 1.2715 increases the chances of further upward movement towards the resistance zone of 1.2788–1.2801. The pound remains in a sideways range, with neither the bulls nor the bears having a clear advantage.
The wave situation remains quite ambiguous. Current trends are relatively short-term, often featuring single waves. Bullish sentiment among traders persists due to the pound's failure to drop below the level of 1.2584. The latest downward wave once again did not break through the level of 1.2611, near which the lows of all previous waves are located. The recent upward wave also failed to breach the important zone of 1.2788–1.2801 for the bullish trend to gain momentum. Thus, the sideways range persists and will continue until the pair breaks out of the range of 1.2584–1.2801.
There was no significant news background on Monday. Neither the bulls nor the bears showed much enthusiasm for trading the pair, resulting in weak movements throughout the day. The bulls barely managed to surpass the level of 1.2715, but this breakthrough does not open up colorful prospects for them. The sideways range remains intact, and at the moment, buyers can only count on an increase towards the level of 1.2788. What could drive the pound further up? A rebound from the resistance zone of 1.2788-1.2801 is likely, followed by a return to the support zone of 1.2584-1.2611.
The outcomes of the Fed and Bank of England meetings may impact traders' sentiment, but these events are scheduled for next week. For 6-7 working days, the pound may continue to trade with low activity within the sideways range.
On the 4-hour chart, the pair once again bounced off the level of 1.2620 and continued its upward movement towards the Fibonacci level of 61.8%-1.2745. On the 4-hour chart, the horizontal movement between the levels of 1.2620 and 1.2745 is visible. No imminent divergences are observed with any of the indicators, and the ascending trend corridor has been abandoned. The trend may gradually shift to bearish, but this will take time and require substantial efforts from the bears, particularly a close below the level of 1.2620.
Commitments of Traders (COT) Report:
During the last reporting week, the sentiment in the "non-commercial" trader category changed in favor of the bulls. The number of long contracts held by speculators increased by 5546 units, while the number of short contracts decreased by 4651. Several months ago, the overall sentiment among major players shifted to bearish, but the bulls now hold a significant advantage. There is almost a two-fold difference between the number of long and short contracts: 66 thousand versus 35 thousand.
The pound still has excellent downside potential. Over time, the bulls will continue to unwind their buy positions, as all possible factors for buying the British pound have already been exhausted. The recent growth we've seen in the last three months is corrective. For over a month now, the bulls have been unable to push past the 1.2745 level. However, the bears are in no hurry to launch an offensive and cannot overcome the zone of 1.2584–1.2611.
News Calendar for the US and the UK:
On Tuesday, the economic events calendar does not feature any important entries. Therefore, the news background's impact on market sentiment will be negligible today.
Forecast for GBP/USD and Trader Recommendations:
I will not consider selling the pound today as the price is stubbornly moving towards 1.2788, ignoring the level of 1.2715. Buying the 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. Buyers can continue to hold long positions with a target of 1.2788–1.2801.