FX.co ★ Trading plan for the GBP/USD pair for the week of April 19-23. New COT (Commitments of Traders) report.

GBP/USD - 24H.

The GBP/USD currency pair continues to suffer in attempts to correct against the upward trend, which totaled 2,800 points. The pair has been suffering since February 24, that is, for almost two months. The fact that the British currency can not fall in price with a completely failed fundamental background from the UK itself, speaks very well about third-party factors that affect the exchange rate formation. In particular, as we said earlier, this is a "speculative factor" and a factor of flooding the US economy with dollars. Thus, the pound is in a paradoxical situation, when all the fundamental factors speak in favor of its fall, however, it continues to remain very high and continues to remain strongly overbought. On the 24-hour timeframe, the pair's quotes were painfully halved below the Ichimoku cloud and the critical line. However, the overall strength of the movement casts doubt on the further decline in quotes. We, as in the case of the euro currency, expect a resumption of growth in the pound, at least based on the factor of trillions of dollars poured into the US economy. Well, if the "speculative" factor also "helps", then the pound in 2021 will be able to continue to break records of its value while the UK economy is breaking records of its decline and contraction after three "lockdowns" and Brexit. In principle, the pair is very close to both the Ichimoku cloud and the Kijun-sen line. Therefore, as early as next week, these obstacles can be overcome and the upward trend can resume.

COT report.

During the last reporting week (April 6-12), the GBP/USD pair fell by 160 points. The illustration above clearly shows how "strong" the current downward correction is. Recall that in the last 6-8 weeks, professional traders have been actively reducing both buy and sell orders. On February 23, the first 69 thousand were opened, and the second – 34 thousand. Then as of April 6, 44 thousand buy contracts were opened, and sell – 25.7 thousand. Thus, in general, the ratio between purchases and sales has not changed. Only the number of contracts opened by the "Non-commercial" group has changed. Hence the conclusion: the "bullish" mood persists among professional traders, but in general, fewer speculators want to deal with the "unbalanced" pound. In principle, the behavior of non-commercial traders is well illustrated by the indicators under the main chart. The first one, which shows the change in the net positions of the three categories of traders, shows a constant change in direction, constant intersections of lines. And this is all despite the fact that in the last 12-13 months there is a steady upward trend, which does not cause any doubt. It turns out that there is a trend and it is strong, however, the most important category of traders does not buy the pound sterling with huge transactions. Moreover, the second indicator shows that non-commercial traders have been increasing their purchases and sales in the last six months. That is, there was no clear "bullish" mood. This only proves once again the fact that the pound and the euro grew in the last year on the factor of increasing the money supply in the United States. That is, the big players traded following their interests and goals, but their deals were blocked by the infusion of trillions of dollars into the US economy. Well, in the reporting week, non-commercial traders began to re-open purchase contracts, in the amount of 7.2 thousand. Less than a thousand sales contracts were opened. It seems that the major players are once again beginning to believe in the growth of the "bitcoin-like" pound sterling.

During the current week, reports on industrial production and GDP were published in the UK. The first grew by 1.0% every month, the second - by 0.4% every month. In general, these data are neither strong nor weak. GDP, in general, was published this time, not in the classical dimension (quarterly), so it is difficult to understand what will happen in the first quarter. Although we expect its new reduction. Traders did not pay much attention to the macroeconomic statistics from the Foggy Albion, and in the States - they did not ignore the inflation report. In principle, the rest of the fundamental background did not cause any interest among traders at all. They are not interested in the rate of vaccination, the rate of economic growth, all the British geopolitical problems, and so on. Now traders are interested in the pound sterling as a way to make money (a speculative factor), and the inflated money supply in the United States generally has nothing to do with traders, although it is due to it that the US dollar is getting cheaper and may continue to do so in 2021.

Trading plan for the week of April 19-23:

1) The pound/dollar pair is doing its best to continue the downward movement. Thus, it will be possible to resume trading for an increase on the 24-hour timeframe not earlier than the price-fixing above the Kijun-sen and Senkou Span B lines. We believe that the pair has much more chances of resuming the upward movement. The naked eye can see the "unwillingness" of the pair to become cheaper.

2) Sellers have been trying to push the pair down by any serious value for almost two months now. So far, given the location of the price below the Kijun-sen and Senkou Span B lines, the chances of continuing the downward movement remain. However, the markets do not pay attention to the "foundation", so the fall of the pound sterling does not work. Well, the United States continues to inflate the money supply, so the US dollar continues to become cheaper in the long term.

Explanation of illustrations:

Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.

Ichimoku indicators, Bollinger Bands, MACD.

Support and resistance areas – areas from which the price has repeatedly bounced before.

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.