GBP/USD 5M
The GBP/USD pair was falling on Monday, which, in principle, is absolutely logical after it settled below the upward trend line on the hourly timeframe. Unfortunately, the critical Kijun-sen line, which was supposed to provide support or resistance to the price, did not fulfill its functions. The price overcame it as it wanted. And this could confuse market participants. In general, trading began with multidirectional movements during the Asian trading session. Half an hour before the beginning of the European session, the pound/dollar pair dropped to the Kijun-sen line and rebounded from it. The rebound turned out to be quite accurate and clear, so traders could open long positions here while aiming for the Senkou Span B line. Unfortunately, at the beginning of the European session, the bears were active again and the pair fell back to the critical line, which was later overcome. Therefore, market participants should have gone to zero at the first signal, since the price went up 30 points, therefore Stop Loss should have been located at breakeven for this deal. The next sell signal, which is marked by the second rectangle, turned out to be not false, and the nearest target - the extremum level of 1.3857 - was reached. Thus, this signal has already brought 37 points worth of profit . And then the third signal was formed - to buy - on the rebound from the 1.3857 level. And again, a fairly clear rebound. At the moment, the quotes have almost returned to the critical line, therefore, buy orders can be closed at a profit of +20 more points. On the whole, a dull Monday made it possible to earn around 50 points according to our recommendations. No important reports published in either the UK or the US during the day.
GBP/USD 1H
You could clearly see on the hourly timeframe that the pair's quotes dropped to the 1.3857 level and rebounded from it. Thus, the upward movement is now possible, at least back to the critical line. But today we would not count on a rebound from the Kijun-sen line and would not consider it as a signal, since the quotes ignored this line several times during the past day. No important events scheduled for Tuesday in Britain, while the US will release its industrial production report for February, which isn't that important. A certain reaction of the markets may follow, but we believe that if they do react to it, it will be minimal. Thus, tomorrow technical factors will prevail again. In general, we continue to recommend trading from important levels and lines, when rebounding from them and overcoming them. As before, you are advised to set the Stop Loss level at breakeven when the price passes 15-20 points in the right direction. The nearest level/line is always used as targets.
COT report
The GBP/USD pair fell by 100 points during the last reporting week (March 2-8). Despite the fact that the pound has been falling in the past two weeks, hardly anyone can now conclude that the upward trend is over. In principle, everything is clearly visible in the chart above. Moreover, just in the last 5-6 weeks, professional traders have been actively buying the pound. This is evidenced by the green line of the first indicator, which reflects the change in the net position of the group of non-commercial traders. At the same time, the Commercial group is increasing sales contracts. And this behavior of the two main groups of traders is the main sign of a strong trend. Thus, we see the strongest uncorrelation of the two main pairs. If the euro has been correcting for two and a half months, the pound has not. If the COT reports on the euro indicate a weakening of the bullish sentiment, then the COT reports on the pound - they say the opposite. Thus, the main thing now is not to try to assume that the pound and the euro will move in the same way, as is often the case. Unfortunately, there are no unambiguous factors as to why the euro and the pound are moving differently now. After all, if they do not correlate, this means that there are now global factors that have a strong impact on one or another currency in the eurozone or the UK. One negative is now coming from the UK, but the pound is growing much stronger than the euro. Could there be a problem in the eurozone? But we don't really receive much disappointing news from over there. Well, is it worth saying that the euro and the pound did not react in the same way to the growth factor in the yield of US Treasuries? Thus, in general, we believe that the COT reports for the pound unambiguously speak in favor of continuing the upward movement.
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.
