GBP/USD 1H
The GBP/USD pair, unlike the EUR/USD pair, started a downward movement and continues it. The support level of 1.2497 was reached yesterday, from which the price successfully rebounded and at the moment adjusted to the critical Kijun-sen line, which is very convenient, since now we will find out in the next few hours whether there will be a rebound from this line or a closure over it. In the first case, the initiative in the market will remain in the hands of sellers and the downward movement will continue with new goals indicated by the red arrows in the illustration. In the second case, the bulls will have a chance to resume moving up, at least to the resistance area of 1.2668-1.2688, which the pair has reached three times in recent days.
GBP/USD 15M
The lower linear regression channel turned up on the 15-minute timeframe, signaling a correction. Thus, it is now extremely important for sellers to stay below the Kijun-sen line, so that the correction does not go into an upward trend. The latest COT report was absolutely logical and reflects the essence of what is happening at this time in the currency market for the pound/dollar pair. Professional traders opened 6,743 Buy-contracts and as many as 12 Sell-contracts during the reporting week. Thus, the total net position in the commercial category immediately increased by 6,700. Despite the fact that the total number of contracts in the commercial category is approximately 115,000, and the preponderance of Buy over Sell was -21 thousand, which is +6,700 in the net position - this is a serious strengthening of the bullish mood. However, the pound is mostly cheaper at the beginning of the new week. It is still difficult to say whether this movement will continue, but the COT report may show changes in favor of sellers at the end of the new reporting week.
The fundamental background for the GBP/USD pair does not change much. Latest report showed that the UK GDP began to recover in May, but at a much slower pace than market participants expected. In addition, UK doctors predict a second wave of the pandemic, which will be much stronger than the first and will take 2.5 times more lives. On this news, the British pound began a new round of decline. However, if the UK is only predicting new epidemiological problems, then the United States is sitting in them up to their ears. Yesterday it became known that one of the largest and most economically active states of America – California - is again closed for quarantine. This was reported by its governor, Gavin Newsom. The reason, of course, is the coronavirus, the increase in cases of which is growing at an alarming rate, as stated by Newsom. Restaurants, bars, concert venues, zoos and museums should prohibit visitors from entering their premises, but they will be allowed to carry out their activities outdoors. At the same time, World Health Organization head Tedros Adhanom Ghebreyesus said that "the actions of many governments do not correspond to the status of the number one COVID virus problem in the world at this time." Ghebreyesus said that the epidemic will spread further and deeper if governments around the world do not take serious and decisive measures to counteract it. "There will be no return to the old normal for the foreseeable future", Ghebreyesus said.
There are two main scenarios as of July 15:
1) The bullish outlook dramatically worsened at the start of the new trading week. At this time, the pair's purchases are no longer relevant, as quotes have gone below the critical line and below the rising channel. Thus, we recommend that you return to buying the British pound, but not before crossing the Kijun-sen line of the Ichimoku indicator, which lies at 1.2573. The goal is the resistance area of 1.2668-1.2688. Potential Take Profit in this case will be about 90 points.
2) Sellers are advised to resume trading on a lower level with targets at support level 1.2497, Senkou Span B line (1.2458) and support level 1.2375 if a rebound follows from the Kijun-sen line. Today's reports on UK inflation and US industrial production are unlikely to fundamentally change the mood of traders. Potential Take Profit range from 60 to 180 points.
