GBP/USD 5M
The GBP/USD pair moved quite actively on July 19. Last Friday, traders could have earned around 150 points according to our recommendations. Let's see how you should have traded on Monday. It should be noted right away that there were no macroeconomic reports or important fundamental events in the UK and the United States on the first trading day of the week. Therefore, there was nothing for traders to react to. However, the fundamentals from the UK continue to be poor. At this time, the main problem of the UK is the coronavirus, which continues to attack Great Britain. Recently, there have been around 50,000 new cases of the disease every day, and at the same time yesterday, July 19, Boris Johnson lifted all quarantine restrictions. Then he went into self-isolation with suspicion of coronavirus. Such events and possible new problems with the economy provoked a new fall in the British currency. We still believe that it will be very difficult for the pair to go below the 1.3600 level. Nevertheless, the downward movement is still present. Yesterday, the pair formed the first sell signal at the opening of the European trading session. The price settled below the extremum level of 1.3754, and then immediately overcame the level of 1.3731. Unfortunately, this signal turned out to be false, since the price subsequently returned to the area above the level of 1.3731, formed a buy signal, which also turned out to be false, and resumed its downward movement. Thus, two false signals were formed near the level of 1.3731 at once, therefore the third (a sell signal) should not have been worked out. The first trade was closed at zero at Stop Loss, set at breakeven. But the second trade brought a loss of 20 points. It's okay, because it is impossible to make a profit every day.
Overview of the EUR/USD pair. July 20. Preview of the week. Boredom and a passing meeting of the ECB.
Overview of the GBP/USD pair. July 20. Was it a total British error or the most accurate estimate of the British government?
GBP/USD 1H
The pound/dollar pair will continue a fairly strong downward movement on the hourly timeframe, which began quite unexpectedly. However, this downward movement still raises some doubts. The fact is that it was provoked by a difficult epidemic situation in Britain, but the markets are unlikely to work out a medical problem for a long time. Still, this is the foreign exchange market, so participants look at macroeconomic indicators. At worst, they pay attention to politics. Thus, despite the strength of the downward movement, it can be very short-lived. In addition, at this time, there is still no trend line or channel to support the downward trend. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3564, 1.3677, 1.3731, 1.3754, 1.3800. Senkou Span B (1.3820) and Kijun-sen (1.3778) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. No important or interesting reports or events in the UK and the US on Tuesday. However, the volatility for the pound/dollar pair may remain quite high, and the pound itself may continue its downward movement.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 35 points during the last reporting week (July 6-12). However, this is not a price change that can be considered significant. During the reporting week, the group of traders "non-commercial" opened only 1,700 sell contracts (shorts), but at the same time it closed 8,000 buy contracts (longs). Thus, the net position of professionals has decreased by almost 10,000 contracts. Considering that only around 100,000 contracts were opened for the major players before last week, then 10,000 is a serious change in the mood of professional players. Thus, the mood of non-commercial traders has become much less bullish than before, and is already approaching the concept of neutral, as they have 43,000 buy contracts and 36,600 sell contracts left open. Almost complete equality. Based on this, we can assume that the pound may continue to fall. From our point of view, the pound currently has more chances for a further fall than the euro. This is supported by the difficult epidemiological situation in the UK, as well as a stronger decline in the net position. However, one should not write off the fact that the Federal Reserve and the US Treasury are injecting trillions of dollars into the American economy. This factor can still strongly influence the demand and supply of the US currency in the foreign exchange market. Consequently, we still expect that the pound/dollar pair may drop to the 1.3600-1.3666 area, but we do not consider the option with a further fall.
Explanations for the chart:
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.
