GBP/USD 1H
The GBP/USD pair, just like the euro, calmly resumed its upward movement, broke through the resistance level of 1.2755 and almost reached the June 10 high of 1.2812 last Friday. Thus, after a two-day rest, the buyers are active again and ready to conquer new peaks. The upward trend line has once again been rebuilt, and continues to support the bulls. The bears, having made several attempts to gain a foothold below the critical line, again surrendered their positions and can now only rely on the mercy of the bulls, which sooner or later will start taking profits on open longs, which will allow the pair to slightly correct or start a new downward trend.
GBP/USD 15M
Both linear regression channels are again directed upwards on the 15-minute timeframe, so there are no prerequisites for changing the trend direction at the moment. The latest Commitment of traders (COT) report for the British pound is alarming. The fact is that the British currency again rose in price during the reporting period (July 15-21), but the most important category of "non-commercial" traders at this time was busy opening Sell-contracts. During the week, non-profit traders opened 4,500 thousand new Sell-contracts and only 3,000 Buy-contracts. Thus, the net position decreased by about 1,500 contracts, which means that the bearish mood among the major players has increased. However, as we have said, the pound was growing in that time period. The most interesting thing is that the "commercial" category also did not open Buy-contracts. Quite the contrary, it got rid of them, closing almost 5,000. The same fate befell the Sell-contracts, which were reduced by 2,500 thousand. Thus, both groups of traders did not increase longs, however, the pound rose in price. We believe that this is a signal for an incipient change in the trend.
The fundamental background for the GBP/USD pair is still reduced to news on the epidemic and rallies from America. No economic information is being received from the UK at this time, and the next round of negotiations on a post-Brexit agreement between Brussels and London has failed, as no one doubted. Well, nothing changes in the United States. The coronavirus continues to rage, rallies and public riots continue to rage, the White House continues to take a too neutral position, US President Donald Trump continues to amuse with his contradictory statements. Most importantly, there will again be no macroeconomic statistics in the UK this week. However, there will be a lot of important data overseas. The main thing is the GDP figure for the second quarter, which may just bury the US dollar, as it is expected to be -35% compared to the first quarter. However, at the same time, market participants could ignore macroeconomic data. Thus, we advise you to pay attention to technical factors this week, the fact that major players do not increase their longs, which means that there may be a trend reversal, as well as to the two most important events of the week – the Federal Reserve meeting and the publication of GDP. Today, a new round of downward correction is still expected, as it has recently become more and more difficult for the pound to grow.
There are two main scenarios as of July 27:
1) The outlook for the bulls continues to be very positive, but at the same time, this week we need to be ready for a downward turn. Buyers reached a high of 1.2812 from June 10. Thus, a downward correction may follow from this level. However, if buyers manage to overcome it, you are advised to open purchases on Monday with the goals of 1.2846 and 1.2896. Potential Take Profit in this case will amount to another 20 to 70 points.
2) Sellers are advised to start considering the possibility of opening short positions with the goal of the Senkou Span B line (1.2623), but to do this, you need to wait until the Kijun-sen line (1.2709) has been overcome and, accordingly, the trend line. The potential Take Profit in this case is about 70 points.
