GBP/USD 5M
The GBP/USD pair was moving very chaotic on August 5, which is absolutely not surprising, given the nature and essence of yesterday's fundamental background. Let us briefly recall that yesterday, the results of the Bank of England meeting were summed up and announced. And the British central bank made it clear that in the coming months it is not going to reduce or curtail the quantitative stimulus program, to raise the rate. And the main goal for itself is to restore the labor market after all programs of state support for employers are completed in September. The BoE, as well as the Federal Reserve, is ready to sacrifice the growth of inflation. Nevertheless, one member of the monetary committee nevertheless voted to reduce the QE program, so the pound received some support. As for the very movement of the pound/dollar pair on Thursday, at the time when the most important events began, the "storm" also began. The "storm" was not strong, but the pair was still going from side to side. The most interesting thing is that traders had the opportunity to open a profitable trade early in the morning, even before the publication of all important data. The quotes briefly settled below the extremum level of 1.3886 at the beginning of the European session, which should have been interpreted as a sell signal, and then began to move up sharply, which should have been worked out with long positions. On the short trade, a loss of 18 points was obtained, and on the long trade, a profit of 30 points, since the price reached the nearest target - the Kijun-sen line. Further, of course, the pair should not have been traded, because just a couple of hours later, the results of the BoE meeting began to be summed up. Even the signals that were formed in the US trading session should not have been worked out, since they were all formed near the critical line, around which at that time a dozen false signals had already been formed. Therefore, the day ended for traders with low profit.
Overview of the EUR/USD pair. August 6. Richard Clarida's speech rocked the markets for exactly one hour. Then everything returned to normal.
Overview of the GBP/USD pair. August 6. The number of those who voted to cut the QE program at the Bank of England increased from 1 to 1.
GBP/USD 1H
The pound/dollar pair settled below the rising trendline on the hourly timeframe, and then below the rising channel. Thus, there is no upward trend now, but the fact that the price has failed to overcome the level of 1.3886 several times also speaks not in favor of the bears. The pair has been flat throughout the current week. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3800, 1.3886, 1.3981, 1.4000. Senkou Span B (1.3775) and Kijun-sen (1.3925) 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. There will be no major events in the UK on Friday, but important reports will be published in the US. Among them are NonFarm Payrolls, which will mainly affect the pair's movement in the afternoon, as well as reports on unemployment and wages, which can also provoke a market reaction. In any case, today we expect active movements from both major currency pairs.
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.
