GBP/USD – 4H.
Good day, dear traders!
As seen on the 4-hour chart, on Tuesday, the "Briton" performed another return to the upper line of the downward trend corridor and rebound from it. Thus, the chances that the fall in quotes of the pound/dollar pair will remain. Yesterday's bullish divergence in the CCI indicator has been worked out. Also, traders performed consolidation under the global correction line, which also increases the likelihood of a further fall of the pair. At the same time, I remind you that when the pair closes over the trend area, the trading idea with sales of the "Briton" will be canceled for a while.
News overview:
On Tuesday, February 18, the UK released data on the unemployment rate (3.8%), the number of applications for unemployment benefits (5.5 thousand) and the change in the level of average earnings (+2.9% and +3.2%). Traders were counting on a higher value of wage growth, but otherwise, the data did not differ too much from traders' expectations.
The following reports will be released in the UK on Wednesday, February 19:
Consumer price index (09:30 UTC+00).
Retail price index (09:30 UTC+00).
There will be no important economic reports in America today. The greatest attention of traders will be focused on inflation in Britain and according to forecasts, it can accelerate from 1.3% y/y to 1.6% y/y. However, for the trading idea to be realized, the value of inflation in January should be lower than the forecast, that is, worse than traders' expectations.
The COT report (Commitments of traders):
Major market players continue to shorten the British pound. For the week of February 11, the total number of short positions increased by almost 6,000 and long positions decreased by 2,000. The total number of short positions in the commercial category exceeds the total number of long positions. Among hedge funds and speculators, there is a slight predominance of long positions. The total number of short and long is almost the same. Further pressure by major players on the position of the "Briton" is required.
Forecast for GBP/USD and recommendations for traders:
The trading idea is to sell the pound with targets of 1.2904 and 1.2789 since there are already two signals for this. I think the stop-loss should be short, that is, above the upper line of the descending corridor on the 4-hour chart. A weak report on inflation in the UK may increase demand for the dollar and reduce by the pound, which is what we need to implement the trade idea.
