GBP/USD 5M
The GBP/USD currency pair continued to trade indistinctly on Wednesday. If you look at the hourly timeframe, you may get the impression that there are movements in the pound/dollar pair on the market right now, but switching to the 5-minute chart it becomes clear that the market is flat. And even if there is a slight upward slope, it is still very difficult to work out the movements. What do we see on the 5-minute TF? Firstly, both linear regression channels are directed almost sideways. Secondly, the movements of the pair themselves are as non-brand as possible. In addition, yesterday there was not a single macroeconomic report, not a single fundamental event. As is the case with the euro/dollar pair. The volatility of the day was slightly more than 50 points, which is very small for the pound.
As for trading signals, several were formed yesterday. Given the flat, there were false signals, but let's analyze them all in more detail. First of all, a false sell signal was formed when the price settled below the critical line and below the extreme level of 1.3550. However, the downward movement immediately ended, and the price returned above these lines and levels. Therefore, the short position should have been immediately closed and a long position opened instead. The buy signal turned out to be already profitable, as the price rose to the level of 1.3586 and formed an ideal sell signal in terms of accuracy and strength near it. Therefore, at this moment it was necessary to close long positions and open short ones. Subsequently, the price once again returned to the level of 1.3586 and once again rebounded perfectly from it, forming another sell signal. Therefore, in principle, it does not matter in which case traders opened shorts. A Stop Loss at breakeven between these signals should not have been set, since the price did not go down 20 points. But after the second signal, it dropped back to the Kijun-sen line and the 1.3550 level, where the shorts should have been closed. As a result, it was possible to earn about 20 points on all transactions.
COT report
We would call the latest Commitment of Traders (COT) report on the British pound very strange. Professional "non-commercial" traders increased their short positions during the last reporting week, which led to a new drop in their net position. Now the green line is again below the zero level, which signals the bearish mood of non-commercial traders. At the same time, in December 2021, the green and red lines of the first indicator moved far away from each other, and therefore began to move towards each other, which signals the end of the trend. Thus, now there is also reason to assume that a new, upward trend in the pound has begun. However, the major players are not in a hurry to stock up on the British currency yet, therefore, from the point of view of COT reports, the new upward trend is not entirely unambiguous. It is quite possible that the pound will still try to fall again to the level of 1.3163 before starting a new trend. Here, of course, you need to turn to technical analysis, which visualizes everything that is happening in the foreign exchange market. The situation with COT reports is not clear now, so caution is needed when making trading decisions.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 10. Markets are starting to believe that the ECB will raise rates this year.
Overview of the GBP/USD pair. February 10. Northern Ireland Protocol: Johnson started talking about Article 16 again.
Forecast and trading signals for EUR/USD on February 10. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair strenuously ignored the critical line all Wednesday, having managed to settle above it and go back below. As a result, there was no more clarity in the future prospects of the pair's movement. Moreover, now there is neither a trend line nor a channel to determine the trend. As a result, we need to wait for clarification of the situation. We highlight the following important levels on February 10: 1.3439, 1.3489, 1.3550, 1.3586, 1.3614. The Senkou Span B (1.3491) and Kijun-sen (1.3557) 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. Also, there are support and resistance levels on the chart that can be used to take profits on transactions. No important events are scheduled in the UK on Thursday, but there are some in the US. However, we are still talking about the same inflation report, about which a lot has already been said this week. It remains only to wait for its value.
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.
