FX.co ★ Forecast and trading signals for GBP/USD for October 4. Detailed analysis of the movement of the pair and trade deals. The British pound quickly outlived the "fuel crisis"

GBP/USD 5M

The GBP/USD pair also traded almost perfectly on October 1, passing about 140 points per day. The movement itself did not raise any questions either, since the pair was moving in only one direction almost throughout the day. Immediately I would like to note that it may seem that the British pound's entire growth on Friday was triggered only by the report on business activity in the UK manufacturing sector. It is marked with the number "1" in the chart, and it was at this time that the pair began to grow. However, the report itself does not provide grounds for drawing such conclusions. The fact is that the PMI was 57.1 points against the forecast of 56.3. It's not such a big mismatch for the markets to rush to work it out. Formally, there was a reason for buying the British currency, but it was very illusive. Thus, we believe that this is just a coincidence. Exactly the same coincidence may be that after the publication of data on personal income and expenses of Americans (figure "2" in the chart), the pair began to grow, although these data were better than forecasted and, accordingly, should have provoked a fall in the pair. After the ISM index was published, the euro fell 17 points, which is equal to a third of its daily volatility, and the pound practically did not react in any way. Therefore, we conclude that all movements of the pound/dollar on Friday had no dependence on the macroeconomics. In this case, it could be a corrective movement against the fall earlier by 300 points. As for the trading signals, there were only three of them and they began to form only some time after the upward movement began. The first buy signal was formed when the extremum level 1.3519 was overcome. As a result, the price rose to the extreme level of 1.3570, from which it rebounded. Thus, at this moment, one should close long positions and open short positions. We managed to earn about 24 points. The short position should have been closed near the support level of 1.3535, as it also bounced off. About 10 more points arrived. We are not looking for trading signals around support levels, so the next one was a sell signal when we rebound from 1.3570 again. It was formed in the evening, so it could be ignored. Nevertheless, if traders decided to work it out, then they could earn about 10 more points. Thus, 35-45 points of profit on Friday could be obtained.

GBP/USD 1H

The pound/dollar pair continues its upward correction on the hourly timeframe. However, at this time, there is neither a trend line nor a channel, so it is too early to talk about a trend. At the moment, the pair has risen to the critical line and even rebounded from it. Therefore, the downward movement may resume. But overcoming the Kijun-sen line will allow us to expect the pound's succeeding growth. Take note that last week this currency collapsed due to the "fuel crisis" in Great Britain. But it looks like the markets have already worked out this topic, so the pair began to recover. We distinguish the following important levels on October 4: 1.3304, 1.3416, 1.3519, 1.3570, 1.3601 - 1.3607. Senkou Span B (1.3730) and Kijun-sen (1.3568) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. There are no major macroeconomic reports scheduled in the UK on Monday either. Thus, the pair will be trading on pure technique almost until Friday, when the report on Nonfarm will be published in America.

We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.

COT report

Major players slightly strengthened their bullish mood during the last reporting week (September 21-27). Although it is now as neutral as possible in fact. The fact is that the value of the net position for the non-commercial group of traders is now around zero, which means equality between the number of open long and short positions in the pound. Consequently, neither bulls nor bears have the initiative. Moreover, in the last couple of months, the mood of professional traders has been constantly changing, as the net position is either increasing or decreasing. Thus, from our point of view, the conclusion is obvious: the COT reports do not indicate either bullish or bearish sentiment now. During the reporting week, changes in the non-commercial group were minimal. 5.5 thousand Buy contracts (longs) and 4.5 thousand Sell contracts (shorts) were opened. Thus, the net position of non-commercial traders increased by 1,000. If in the case of the European currency, the COT reports signal a very likely further fall, then in the case of the pound, the COT reports just indicate the neutral mood of traders. The picture above shows a clear downward trend, but the problem is that professional players do not continue selling the British currency. Consequently, further decline is not evident for the pound. Take note that the euro corrected by about 43% against the upward trend, and the pound - by 24%.

Explanations for the chart:

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.