GBP/USD 1H
The pound/dollar pair continued its upward movement on Tuesday, June 2, and also overcame the resistance level of 1.2529. Now this resistance level may be a kind of reference level for further purchases of the British currency. The fact is that, unlike the euro currency, which has a very narrow upward channel, the GBP/USD pair has only an upward trend line, which now lies at a distance of about 230 points. Thus, even if the instrument falls by 230 points tomorrow, formally the upward trend will continue. This combination of circumstances is very inconvenient for opening new positions for the purchase. Especially in conditions when the British pound can return to a fall at any moment. Thus, we recommend using the 1.2529 level to set the Stop Loss under it. If the pair goes below it, then the new buy-position can be considered after the reverse consolidation above it.
GBP/USD 15M
Both linear regression channels continue to be directed upward on the 15-minute timeframe, therefore, there are no signs of completing the upward trend here, just as there are no signs of starting a correctional movement.
COT Report
Despite the fact that in total among all major market participants, the demand for the pound sterling did not change during the reporting week (a total of 8600 contracts for buying and selling were opened), professional traders mainly bought the pound sterling - +5205 contracts, and from contracts for on the contrary, they got rid of the sale at -686 transactions. Thus, the mood of traders remains upward, and in principle, the situation has not changed at the end of last week. The GBP/USD pair continues to grow at the beginning of the new week, which means that the demand for the pound does not decrease. The new COT report may show even greater strengthening of the position of large buyers.
The fundamental background for the British pound remains negative despite the fact that this currency continues to go up in tandem with the dollar. Macroeconomic reports in the first two trading days of the week were not published either in the US or in the UK. And at the same time in both countries there are already serious financial problems, as well as new ones are brewing. However, the US dollar is now cheaper because of mass protests, the wave of which swept the United States, and not because of economic reports or the possible start of a new trade war with China. Recall that during the previous trade conflict with Beijing, most of the time the US currency continued to rise in price against the euro and against the pound. At least, fears for an escalation of the conflict did not push traders to sell the dollar. Thus, even now, this reason seems insufficient to independently cause the US currency to fall. All macroeconomic publications of today are already listed in the forecast for EUR/USD. In the UK, only the index of business activity in the services sector is planned on June 3, which is likely to be ignored by traders with a 99% probability. However, market participants are now interested in completely different things. For example, the outcome of the fourth round of negotiations between the groups of Michel Barnier and David Frost, as well as the results of Boris Johnson's trip to Brussels.
There are two main scenarios as of June 3:
1) The initiative for the pound/dollar pair remains in the hands of buyers and, since the next resistance level of 1.2529 was overcome yesterday, traders are advised to stay in purchases with the target of 1.2664. A short Stop Loss can be set below the 1.2529 level and, if it works, it is recommended that new purchases be made only after re-consolidation above the 1.2529 level. Take Profit will be about 100 points.
2) Sellers continue to remain in the shadow and will be ready to return to the market only below the ascending trend line. Of course, short positions can be considered up to this point, but at the moment there are no prerequisites for this. We consider the minimum necessary condition for sellers to overcome the area of 1.2403-1.2423. Then it will be possible to sell the pair while aiming for the trend line (1.2310). In this case, Take Profit will be about 90 points.
