GBP/USD – 1H
Hello, dear trader! On the H1 chart, GBP/USD reversed, marking the beginning of the bullish trend. The quote is moving toward the 76.4% retracement of 1.3668. In case of a pullback from this mark or the trend line, the price may reverse and go down to the 0.0% retracement level of 1.3572. If the price closes above the trend line, market sentiment will no longer be bearish. On Friday, bears seemed to be tired from selling the pound sterling during the week. Retail sales in the United Kingdom came out worse than expected. However, the results did not trigger another sell-off.
On Friday, the pair was trading in a relatively narrow range. Today, the price is moving towards the trend line. Indeed, the greenback has been strong for a long time. Maybe it is time for a reversal? If so, the pound sterling should rise by just 50 pips. The UK PMI report for August may well boost the British currency today. It all will depend on the PMI results in the US or the UK. If business activity comes out in line with market estimates in the UK and not in the US, the quote is likely to close above the trend line. Indeed, there are many questions about the state of the British economy right now. Rumors about tapering are circulating in the country. However, given a slow economic recovery, the Bank of England is expected to take such a step only after its American counterpart.
GBP/USD – 4H
On the H4 chart, the price reversed after the CCI indicator formed a bullish divergence. The price is moving towards the 23.6% Fibonacci retracement of 1.3729. The trend line on the H1 chart is now of greater importance.
Macroeconomic calendar in the US and the UK:
UK - Manufacturing PMI (08:30 UTC) and services PMI (08:30 UTC).
US - Manufacturing PMI (13:45 UTC) and services PMI (13:45 UTC).
On Monday, a series of business activity data for August is set to be published both in the UK and the US. The result may either trigger market jitters or go unnoticed.
Commitments of Traders (COT) report:
The latest COT report as of August 17, revealed a decrease in bullish sentiment. In the previous week, speculators closed 2,718 long positions and 312 short ones. Speculators are now holding more long positions than short ones. At the same time, the number of long and short positions is almost the same. As for other categories of traders, the situation is no different. This means that the market is neither bullish nor bearish.
Outlook for GBP/USD:
If the price closes above the trend line on the H1 chart with targets set at 1.3731 and 1.3776, traders should consider opening long positions. In case of a pullback from the 1.3667 level on the H1 chart or from the trend line, short positions should be considered.
TERMS:
Non-commercial traders are large market players: banks, hedge funds, investment funds, private, and large investors.
Commercial traders are commercial enterprises, firms, banks, corporations, and companies that buy currency not to obtain speculative profit, but to ensure current activities or export-import transactions.
Non-reportable positions are small traders who do not have a significant impact on the price.
