FX.co ★ Forecast and trading signals for GBP/USD for October 10. COT report. Detailed analysis of the pair's movement and trade deals. The pound still has chances to rise, but...

GBP/USD 5M

The GBP/USD currency pair also continued its downward movement on Friday, although it was weaker than in the previous two days. Nevertheless, the fall continues, but the pound is still above the critical line, therefore, formally, it still retains chances for the resumption of the upward movement. The price is also above the important Kijun-sen line on the 24-hour TF. Thus, either in the coming days, the pound will resume growth, or it will suffer the fate of the euro. On Friday, the reasons for the fall of the pair were the same as those of the euro/dollar pair. Unfortunately, geopolitics remains so complicated that it is very difficult to expect risky currencies to rise against the dollar. Next week, everyone will be waiting for Moscow's reaction to the Nord Stream and Crimean Bridge bombings. As usual, there are a huge number of versions of who is behind these attacks, and each of the parties to the conflict sees what happened from its own angle. One way or another, it is hardly worth expecting that these events will remain without consequences. Thus, we can only expect a worsening of the geopolitical tension in the world, which is very bad for the pound and the euro.

Only one trading signal was formed on Friday. The price traded along the 1.1212 level for several hours and eventually bounced off it. True, the rebound occurred exactly at the time when important statistics were published in America, but it unequivocally supported the growth of the dollar, so a short position could be opened. We also managed to earn on this position, as there was no upward correction. It had to be closed manually in the late afternoon, and the profit on it was at least 60 points.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed minimal changes. During the week, the non-commercial group closed 17,700 long positions and 14,600 short positions. Thus, the net position of non-commercial traders decreased by 3,100, which is not very much for the pound. We could assume that the actions of major players and the movement of the pound have finally begun to coincide, but the pound has already begun a new round of decline, which risks transforming into a continuation of the global downward trend. The net position indicator has been growing slightly over the past weeks, but the mood of the big players remains "pronounced bearish", which is clearly seen in the second indicator in the chart above (purple bars below zero = "bearish" mood). And, if we recall the situation with the euro, then there are big doubts that based on the COT reports, we can expect a strong growth of the pair. How can you count on it if the market buys the dollar more than the pound? The non-commercial group now has a total of 91,000 shorts and 42,000 longs open. The difference, as we see, is still very large. The euro cannot show growth if the major players are bullish, and the pound will suddenly be able to grow if the mood is bearish? We remain skeptical about the long-term growth of the British currency, although there are still certain technical reasons for this.

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GBP/USD 1H

The pound/dollar pair has already rolled back down by 420 points on the hourly timeframe, but at the same time it still maintains an upward trend. Unfortunately, in the long term, the downward trend may well resume as geopolitics remain very complex. And the foundation - at least such that does not allow counting on the support of the British currency. Now all the attention is on geopolitics and Senkou Span B on the 4-hour timeframe and Kijun-sen on the 24-hour timeframe. Overcoming them will increase the probability of a new fall of the pound to its absolute lows around the level of 1.3057. We highlight the following important levels on Monday: 1.0538, 1.0930, 1.1212, 1.1354, 1.1442, 1.1649. Senkou Span B (1.0923) and Kijun-sen (1.1292) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. There are no exciting events planned for Monday in either the UK or the US. Therefore, we can even observe a flat, but it is unlikely that it will last for a long time or even take place. The market is not set for sluggish trades.

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.