FX.co ★ GBP/USD. January 9th. The British pound rises on Monday

On the hourly chart, the GBP/USD pair made a new reversal in favor of the British pound on Monday and closed above the corrective level of 61.8% (1.2715). Thus, the upward trend may continue on Tuesday towards the resistance zone of 1.2788–1.2801. A rebound from this zone or a drop below the level of 1.2715 will favor the US dollar and a resumption of the decline towards the support zone of 1.2584–1.2611.

The wave situation remains ambiguous. Earlier, I mentioned that trends are currently quite short-term, and we often see single waves representing a full trend. The bullish sentiment persists due to the absence of a decline in the British pound. However, the waves need to provide clarity about what is happening in the market. The latest downward wave once again did not break the 1.2611 level, around which the lows of all previous waves are located. The new upward wave broke the peak of the previous one, so the British pound may count on returning to the zone of 1.2788–1.2801. I believe the current movement has all the characteristics of a horizontal one.

The information background on Monday was absent for both the British pound and the US dollar. This week, several reports in the US and the UK may help traders determine the direction, but all of them are scheduled for Thursday and Friday at the end of the week. There will be no significant reports on Tuesday and Wednesday. Thus, I see no reason for the pair to move out of the range of 1.2611–1.2788. Horizontal movement persists, and bullish traders maintain their positions and do not allow bears to advance. The level of 1.2611 has already acted as strong support at least three times.

On the 4-hour chart, the pair retraced to the 61.8% Fibonacci level at 1.2745. A new bounce from this level will again work in favor of the US currency and drop to 1.2620. On the 4-hour chart, horizontal movement between the levels of 1.2620 and 1.2745 is visible. No imminent divergences are observed in any of the indicators today, and the ascending trend corridor has been left. The trend may continue to change to bearish, but it will take time.

Commitments of Traders (COT) Report:

The sentiment of the "Non-commercial" trader category changed in favor of the bulls during the last reporting week. The number of long contracts held by speculators increased by 3044 units, while the number of short contracts increased by 1931. The overall sentiment of major players shifted to bearish a few months ago, but currently, the bulls have a slight advantage. There is a gap between the number of long and short contracts: 62 thousand versus 46 thousand, but the gap is small and practically not increasing.

I believe there are excellent prospects for the British pound to fall. I do not expect a strong rise in the British pound. Overbulls will continue to get rid of their Buy positions over time since all possible factors for buying the British pound have already been exhausted. In my view, the recent growth we have seen in the last three months is corrective.

News Calendar for the US and the UK:

On Tuesday, the economic events calendar contains few interesting entries. The impact of the information background on market sentiment will be absent today.

GBP/USD Forecast and Trader Tips:

Selling the British pound will be possible today after consolidation below the 1.2715 level on the hourly chart with a target of 1.2611. Sales are also possible in case of a rebound from the 1.2745 level on the 4-hour chart. Buying today can be considered in case of a rebound from the 1.2715 level on the hourly chart with a target of 1.2788.