GBP/USD 5M
The GBP/USD currency pair also continued its upward movement on Wednesday for most of the day. However, if the euro currency went down a bit in the afternoon, then the pound practically did not. Nevertheless, the movements shown by both currency pairs over the past three days are really very similar. The pound is getting more expensive on the eve of the Bank of England meeting, quite reasonably, since the central bank is likely to raise the key rate. However, it is impossible to completely be certain whether the pound's growth is related to this. It is quite possible that this is just a coincidence. The movements this week are generally not the most logical. Traders have ignored several important macroeconomic reports, so it is generally unclear what exactly they relied on when making trading decisions this week. In any case, after tomorrow, the technical picture should become clearer. At least, I would like to hope so. Only one buy signal was generated on the 5-minute timeframe yesterday. The price bounced off the Senkou Span B line at the beginning of the European trading session, which almost merged with the extreme level of 1.3520, after which the upward movement began by 56 points. That is how much traders could earn in a long position. However, as in the case of the euro currency, the price failed to reach the nearest target level of 1.3598. Therefore, the long position could only be closed manually. The good news is that even if the deal was closed just in the evening, a good profit was still made – about 40 points. Thus, yesterday was quite successful in terms of trading: just one trade, profitable, not a single false signal.
COT report
The latest Commitment of Traders (COT) report on the British pound signals only one thing: the end of the downward trend. Thus, we can at least conclude that the downtrend is nearing its end. The green line of the first indicator (the net position of the "non-commercial" group) first moved to zero from top to bottom, therefore it went much below the zero mark, and now it has returned to it. In addition, in recent weeks, the green and red lines have been moving towards each other, which signals the end of the trend. In our case, a downward trend. Thus, even if the British pound continues to fall to the previous low, the trend may still end in the near future. Or, COT reports should again begin to indicate an increase in the bearish mood among professional traders. At the moment, COT reports suggest that the mood of the major players remains bearish, but "minimally bearish", so to speak. The trend is now to strengthen the bullish intentions. Thus, we now expect the pound to fall to the level of 1.3162, but this round of decline may be the last.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 3. The euro received unexpected support and shot up again.
Overview of the GBP/USD pair. February 3. There is no limit to the optimism of traders. The pound continues to rise non-stop.
Forecast and trading signals for EUR/USD on February 3. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair overcame the second descending trend line yesterday, as well as the Senkou Span B line. Thus, the downward trend has definitely been canceled, but, unfortunately, this conclusion may not last very long. Everything now depends on today's market reaction to the results of the Bank of England meeting. The BoE is likely to raise the key rate and make it clear that it is preparing for two more increases this year. But after the pound has already risen by 200 points, we are not sure that the bulls will continue to buy it. In any case, there is no point in guessing about this. A meeting of the central bank is always an important event, and the market does not always react to it as we would like. We highlight the following important levels on February 3: 1.3362, 1.3439, 1.3489, 1.3598-1.3607, 1.3667. The Senkou Span B (1.3510) and Kijun-sen (1.3472) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. The results of the BoE meeting are scheduled for Thursday in the UK, as we have already talked about more than once. This is the key event of the day and week. A fairly important ISM index for the service sector will be released in America, as well as several secondary reports. But the main attention of traders will, of course, be focused on the results of the BoE meeting and the speech of Chairman Andrew Bailey.
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.
