FX.co ★ Forecast and trading signals for GBP/USD for October 18. COT report. Detailed analysis of the pair's movement and trade deals. The British pound is once again rushing to success.

GBP/USD 5M

The GBP/USD currency pair again showed high volatility on Monday and, just like the EUR/USD pair, grew out of the blue by the end of the day. So, now the British pound is very close to its last local high, and at the same time above the Senkou Span B and Kijun-sen lines, which opens up very good prospects for further growth. We have said before that the pound is more likely to show growth than the euro, thanks to the "technique". As long as the price is above the lines of the Ichimoku indicator, there are high chances for the continuation of the upward movement. But you should be careful! Since the fundamental and geopolitical backgrounds remain very unfavorable for the pound, we may witness a new powerful fall. These movements can look like a wide flat on a 4-hour or 24-hour timeframe. Since it is very difficult to say on the basis of what the pound has grown in recent days, there are two options: either the market still refused further short positions, or we will see a flat on the higher timeframes.

Yesterday's trading signals on the 5-minute timeframe were not ideal, but still they were and they should have been worked out. The first signal was formed literally 15 minutes before the opening of the European session. At this time, the price did not have time to move far from the entry point, so a long position could be opened. Subsequently, the price went to the level of 1.1354, and then to the level of 1.1442, where a sell signal was formed with a small error. Consequently, it was there that longs should have been closed in profit of at least 180 points. The sell signal could also be worked out, it was also profitable, but still it formed quite late, so it could also be ignored.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed a new weakening of the bearish mood. During the week, the non-commercial group opened 6,900 long positions and closed 3,400 short positions. Thus, the net position of non-commercial traders increased by 10,300, which is quite a lot for the pound. One might assume that the actions of the big players and the movement of the pound are finally starting to coincide, as the pound has generally gained over the last period of net growth, but we are worried that this may be another "false alarm". The net position indicator has been growing slightly in recent weeks, but this is not the first time it has risen, but the mood of the big players remains "pronounced bearish" and the pound continues to fall in the medium term. 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 from 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 88,000 shorts and 49,000 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.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. October 18. The ECB will not be able to fight inflation effectively.

Overview of the GBP/USD pair. October 18. The political pun in the UK persists.

Forecast and trading signals for EUR/USD on October 18. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pound/dollar pair once again left the downward channel on the hourly timeframe, and at the same time overcame the lines of the Ichimoku indicator. The price still managed to stay above the critical line on the 24-hour TF, so the pair can continue its upward movement, as we said earlier. However, we remind you that the foundation and geopolitics remain complex, which means that long-term purchases should be treated carefully. On October 18, we highlight the following important levels: 1.1212, 1.1354, 1.1486, 1.1649. Senkou Span B (1.1207) and Kijun-sen (1.1179) 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 positions. There are no major events planned for Tuesday in the UK, but the pound continues to trade in a very volatile manner, so it simply does not need a strong background now. A single report on industrial production in the US is unlikely to "make the weather" on the market.

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.