GBP/USD - 24H.
The GBP/USD currency pair managed to rise by 50 points. Nevertheless, the growth of the British currency on Monday by 156 points covered all future losses. Thus, the pound/dollar pair is now making strenuous attempts to resume the upward movement. In recent weeks and even months, we have repeatedly drawn traders' attention to the fact that the pound is moving in a "swing" mode. It is evident even in the last round of the upward movement. Although the upward slope is visible to the naked eye, the pair constantly alternated white and black candles, constant micro-corrections, pullbacks, and so on. Things are about the same now. The upward trend or downward trend on the chart now looks like this: 300 trend points, 280 correction points. Thus, it is now very difficult to make any forecasts for the pound in general, especially given the factors that supposedly affect it. Recall that inflating the money supply in the United States also affects the rate of the British currency. However, if everything is more or less good in the European Union (we emphasize "more or less"), then everything is terrible in the UK. In fact, in Britain, everything was terrible during the entire period that the pound actively rose in price and then barely adjusted in 2021. Thus, market participants are now clearly thinking about what to do with the pound at all?
On the one hand, since the US currency is highly likely to become cheaper, it is possible to continue groundless purchases of the pound, increasing the "speculative factor" influence. On the other hand, at this rate, the pound will soon return to the 50th level. In general, the situation is difficult, and we believe it is better to trade using the lowest timeframes.
COT report.
During the last reporting week (April 13-19), the GBP/USD pair increased by 200. As for the COT report, the latest report showed no significant changes in the balance between buy and sell contracts for the "Non-commercial" group of traders. During the reporting week, non-commercial traders opened 10.5 thousand buy positions and 8.2 thousand sell positions. Thus, their net position increased by 2.3 thousand contracts, and the mood became a little more "bullish". However, these are not the changes based on which new conclusions can be drawn. In general, the upward trend in the pound remains, and this is the most important thing. As in the case of the European currency, COT reports now do not signal the continuation of the upward trend at all. The key influence on the pair's exchange rate is the factor of pouring trillions of dollars into the US economy, not major players' behavior. If you look at the first indicator, you can see how the red and green lines often intersected, indicating that there is no clear idea in which direction to trade the pound. Now the green and red lines have moved away from each other, which formally means an upward trend. Therefore, based only on the COT reports, we can also assume a further upward movement. However, we have already said that the pound will now be technically very difficult to grow since this growth is already completely unjustified. The pound can continue to strengthen, despite the problems with the "Northern Ireland protocol", the "Scottish question", the weak pace of recovery, a possible drop in GDP in the first quarter, and the general decline in the economy due to Brexit.
During the current week, a relatively large amount of macroeconomic information was published in the UK. It became known that unemployment in the UK fell by the end of February to 4.9%, which is a very low value for the crisis time. The consumer price index accelerated in March to 0.7%, which is still very low. And retail sales jumped 5.4% month-on-month in March. Business activity indices in the service and manufacturing sectors also rose. Thus, the entire package of macroeconomic statistics from the Foggy Albion turned out to be very positive in general. However, not all reports caused positive emotions in the markets themselves.
Given that the pound fell for three days out of five, and almost no statistics were received from overseas, we can conclude that the markets again ignored most of the reports. But we still see an improvement in a whole galaxy of macroeconomic indicators in Britain. Does the pound get a different reason to keep rising?
Trading plan for the week of April 26-30:
1) The pound/dollar pair is trying to resume the upward movement, but so far, it is moving more in the "swing" mode without a clear and strong trend. Thus, formally, there are more chances for a resumption of growth since the price remained at the end of this week above the Kijun-sen and Senkou Span B lines. However, the lines themselves in conditions close to the "flat" may be weak. Thus, next week, it is possible to reduce the quotes of the pound/dollar pair to the lower Bollinger band within the "swing".
2) Sellers still do not have the strength to start forming a downward trend. Formally, if the pair is fixed below the Senkou Span B and Kijun-sen lines, the downward movement may continue. However, we recommend trading the pair at this time using lower timeframes, where trends and trends still have time to form and work out at least a little.
Explanation of illustrations:
Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.
Ichimoku indicators, Bollinger Bands, MACD.
Support and resistance areas – areas from which the price has repeatedly bounced before.
Indicator 1 on the COT charts – the net position size of each category of traders.
Indicator 2 on the COT charts – the net position size for the "Non-commercial" group.
