GBP/USD 5M
The GBP/USD pair moved on August 3 no better than it did last Friday or this Monday. The volatility of the day was about 60 points. Of course, with such volatility, you can work and earn, but it is still very little to count on anything serious. Basically, the pound/dollar pair simply repeated the movements of the euro/dollar pair during the day. First, there was a sluggish upward movement by 50 points, and then a sharper decline by the same 50 points. That's all the movements of the day. No important report published in either the UK or the US on Tuesday, There was not a single important event. And all signals, as in the case of the EUR/USD pair, formed around one extreme level. In principle, when the movements are as similar as possible for several days in a row, it is already worth thinking that something is wrong. You can see on the hourly timeframe. The pair simply stands in one place in a narrow side channel on Monday and Tuesday. Basically, it doesn't take much time to understand all trading signals. At first, the price bounced off the level of 1.3898, and after 30 minutes it overcame it. Thus, the first sell signal turned out to be false and a loss of 13 points was received on it, and no profit or loss was received on the second buy signal, since it was closed by Stop Loss set at breakeven. Naturally, after two false signals near the level of 1.3898, all subsequent signals should no longer be considered. We also draw your attention to the fact that at this time it is even difficult to build new levels, around which signals would be formed. The nature of the movement in recent days is such that the pair simply does not form clear extremes. This can be seen especially well on the hourly timeframe. Thus, now is not the best time to trade.
Overview of the EUR/USD pair. August 4. The US national debt is a headache for the US Treasury and the US Congress, but on the whole it is a solvable problem.
Overview of the GBP/USD pair. August 4. Bank of England meeting: the bank is different, but the market has the same questions.
GBP/USD 1H
The pound/dollar pair has settled below the upward trend line on the hourly timeframe, so the upward trend has temporarily reversed, and the downward correction is likely to continue. On Thursday, the Bank of England will be summing up the results of its meeting and the markets are already trading with an eye to this event. That is, it is less active and less risky. The pair just stood in one place for two days, so the only hope is that today the situation will change. According to all the canons of technical analysis, the downward movement should continue. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3800, 1.3886 (new), 1.3932 (new), 1.3981, 1.4000. Senkou Span B (1.3775) and Kijun-sen (1.3911) 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. Business indices for the service sector will be published in the UK on Wednesday, but the US reports in the form of ISM reports for the service sector and the ADP report on the labor market are of much greater significance. Thus, we expect more active movements in the afternoon.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 200 points during the last reporting week (July 13-19). The data from the latest Commitment of Traders (COT) reports fully support this development: the net position of non-commercial traders is falling, and the pound is also dropping. Thus, everything seems to be logical. However, the first indicator in the chart clearly shows that the upward trend is not ending, but that a new downward trend is about to begin. The green and red lines crossed, which already means a bearish mood of traders. Let us remind you that the green line is the net position of the "non-commercial" group, and the red line is the net position of the "commercial" group. Consequently, at this time, professional players have already opened a larger number of contracts for selling (short) than for buying (longs). And this suggests that major players believe in the further fall of the British currency. But here the same factor also works as for the euro/dollar pair. Trillions of dollars continue to flow into the American economy, which is why its rapid recovery is achieved. However, at the same time, the money supply is growing, inflation is rising, which depreciates the dollar much faster than the sales of the major players of the pound. Consequently, we are fully justified in expecting that the pound will also start to rise in price again, simply because inflating money supply in the United States is more global. During the reporting week, major players immediately opened 11,600 contracts for sale and closed 1,100 contracts for buy. Their net position decreased immediately by 12.7 thousand. Now they already have more open sell positions than buy ones. However, on all these actions of large players, the pound barely managed to get to the last local low, which was formed even when the mood of traders was bullish.
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.
