FX.co ★ Forecast and trading signals for GBP/USD on December 24. COT report. Analysis of Wednesday. Recommendations for Thursday

GBP/USD 15M

The higher linear regression channel is directed sideways on the 15-minute timeframe, the lower one is directed to the upside. An upward trend has formed in the short-term, which corresponds to what is happening on the hourly timeframe. The Senkou Span B line was unbreakable yesterday, so the rising movement began.

GBP/USD 1H

The GBP/USD pair went back to moving up on Wednesday, successfully breaking the downward trend line. Thus, as we recommended in the previous review, traders could open long positions on this signal. Also, as we warned that the quotes would not reach the first target since it is too far away. However, the upward trend has resumed, which is why you should consider bull trading. In general, the pound/dollar pair has started an upward movement again, which is very difficult to explain. However, the foundation will be discussed below, and here - technique. In the coming days, we expect the upward movement to continue as long as the price is above the new trend line. But we do not know as to whether it will be able to renew the 2.5-year highs that it reached only a couple of days ago. Much will depend on the news regarding the results of the negotiations between London and Brussels.

COT report

The GBP/USD pair grew by 80 points in the last reporting week (December 8-14). Slight price changes and the overall upward trend are still present for the pound. But the Commitment of Traders (COT) report in the last reporting week gave us data that does not allow us to make any specific conclusions and forecasts. The changes were again minimal and contradictory. Professional traders closed 4,000 Buy-contracts (longs) and 2,300 Sell-contracts (shorts) during the reporting week. Thus, the net position of the most important group of traders decreased by 2,300, which is not much. This means that major players have become more bearish. But the best thing to do now is to pay attention to the first indicator in order to understand what is happening with the mood of non-commercial traders. The green line (as well as the red one) constantly changes the direction of movement: up and down. This speaks precisely of the lack of a clear and firm attitude of the "non-commercial" group. So now it is impossible to draw any conclusions at all. The pound has been rallying for almost three months (and this is only the last round of its upward movement), but the COT reports does not show that non-commercial traders are becoming more bullish at this time. Or that any group of traders at this time are actively increasing purchases of the pound.

The fundamental backdrop for the British currency was varied on Wednesday, but almost all of the information were rumors. However, market participants had enough rumors to resume buying the pound. According to a journalist, London and Brussels had supposedly reached an agreement. There was no official information yet, however, the markets, as usual, began to work out the information they want to see and in which they continue to believe. Therefore, the pound has grown. Its succeeding growth looks doubtful, since the pound is already very overbought. Without official confirmation of the deal, we believe that the pound will not continue to rise. However, take note that if technical factors continue to point to an upward trend, then you should trade upward. Fundamental hypotheses require technical confirmation.

No major reports or events scheduled in the UK and the US on Thursday. Christmas is about to begin, so the markets slowly leave to celebrate. However, the groups of Michel Barnier and David Frost are unlikely to get on the holidays, which will continue negotiations until the moment when they come to an agreement. Or they will not declare a complete failure. Thus, despite the semi-weekend status of Thursday and Friday, the volatility for the pound/dollar pair may remain quite high, and important information may continue to flow to traders.

We have two trading ideas for December 24:

1) Buyers for the pound/dollar pair will be active due to the next portion of rumors. At the moment, a new upward trend has formed, so you are advised to trade up, and the initial target will be the resistance level of 1.3668, which is located very far away. Take Profit in this case will be up to 160 points, but it may take several days to cover this distance. You can search for new entry points on a lower timeframe, for example, rebounding from the lower lines of the linear regression channels.

2) Sellers refuse to let go of the initiative, and failed to overcome the Senkou Span B line (yesterday it was at the 1.3335 level). Thus, we recommend selling the pound/dollar pair again while aiming for the 1.3323 level and the support area of 1.3160-1.3184, if the price manages to surpass the upward trend line and the Senkou Span B line (1.3378). Take Profit in this case can range from 35 to 180 points.

Forecast and trading signals for EUR/USD

Explanations for illustrations:

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.