GBP/USD – 4H.
Good day, dear traders!
As seen on the 4-hour chart, on Wednesday, the "Briton" performed another rebound from the upper line of the downward trend corridor and a reversal in favor of the US currency with the long-awaited resumption of the fall in quotes. Yesterday, bear traders managed to work out the first target level of 1.2904, which I called a week ago. Now the main thing is not to follow the retreat from this low level, which will work again in favor of the British currency and some growth of the pair within the downward trend corridor, which continues to determine the current mood of traders as "bearish". Thus, I expect today the closing of the pound/dollar pair at the level of 1.2904 and the continuation of the fall in the direction of the low level of 1.2789.
News overview:
On Wednesday, February 19, the UK released data on inflation in January. Although inflation during this period rose to 1.8% y/y and demand for the British pound declined, which led to its fall over the past day. The retail price index also rose relative to the forecast and the value of December (2.7% y/y), which also did not help the pound to start enjoying great demand among traders.
The following reports will be released in the UK on Thursday, February 20:
Retail sales (11-30 GMT +2).
There will be no important economic reports in America again today. This leaves traders with only one report from Britain. Traders expect an increase in retail sales by 0.6% y/y. The main intrigue will be whether this rather weak forecast will be exceeded.
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 positions is almost the same. Further pressure from the major players on the "British" position is required. We are waiting for the new COT report to determine changes in positions among traders.
Forecast for GBP/USD and recommendations for traders:
The trading idea is to sell the pound with a target of 1.2789 if a close is made below the low level of 1.2904. Those traders who are already in sales for my yesterday's trading idea can stay in them. A weak report on retail sales may reduce demand for the "Briton", which is what we need to work out the idea.
