GBP/USD 5M
The GBP/USD currency pair did not trade in the best manner on Tuesday. The largest number of questions is related to the causes of sharp price reversals during the day. For example, in the morning, the pair rose well to the critical line after good statistics on unemployment, applications for unemployment benefits and wages were released in Britain. However, the pound's victorious march did not last very long. The pair turned down near the Kijun-sen line and was followed by a drop of 80 points, despite the fact that the euro/dollar pair continued to grow at this time. It can be assumed that the pound's decline was due to some news from Great Britain, but there was none! The same applies to the upward reversal in the US trading session, which was preceded by an increase in the downward movement. The pair accelerated its decline for no reason at all a few hours after the US session opened, but turned upward near the Senkou Span B line and began an equally rapid growth, although important information was not published in America.
But what absolutely cannot be found fault with on Tuesday is the trading signals. Only two of them were formed during the day, with the first one still to be seen. But both turned out to be strong and profitable in the end. The problem with the first signal is that, in fact, the price did not reach the critical line, since it did not reach it by 2 points. However, such an error can be omitted, because there are often situations when the price bounces 5-10 points above the level or line. Therefore, traders could open short positions in this case, which brought at least 50 points of profit, as the price subsequently fell to the Senkou Span B line and the extreme level of 1.3489, from which a rebound also followed. According to this rebound, it was necessary to close the shorts and open the longs. By the evening, the price went up about 20 points, which should also be taken. As a result, the day turned out to be very successful.
COT report
The latest Commitment of Traders (COT) report on the British pound showed a sharp increase in the bullish mood among the "non-commercial" group. During the week, professional traders opened 15,000 long positions and such changes are significant for the pound. It is not surprising that the major players behaved this way last week, since it was then that the Bank of England announced its decision to raise the key rate by 0.25%. However, the overall picture of the state of things provided by the COT reports now speaks of utter uncertainty. Let's start with the fact that even after the net position of large players has grown by 15,000, their mood is called bearish, since the total number of open long positions per pound is less than the total number of open short ones. Moreover, the chart above clearly shows that the green and red lines of the first indicator, which display the net positions of the two most important groups of traders "commercial" and "non-commercial" are now again near zero. And finding the net position indicator near the zero mark means that the number of long and short positions is approximately the same. Moreover, recent changes in net positions do not give grounds to conclude that the trend has ended now or a new one is starting. Roughly speaking, the mood of the players is changing too quickly, so it is impossible to talk about any long-term trends now.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 16. Temporary relief. It's too temporary.
Overview of the GBP/USD pair. February 16. The Fed has stirred up the markets and has not given any answers. "Think what you want."
Forecast and trading signals for EUR/USD on February 16. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The technical picture continues to be very eloquent on the hourly timeframe. The nature of the movement is clearly visible and does not even require any explanation. The pair is in "swing" mode and ignores almost all important lines and levels. The upward trend line has been canceled, but there is no new trend now. And there is no explicit horizontal channel either. Therefore, the situation remains as confusing as possible and such a picture is now observed on many TF. We highlight the following important levels on February 16: 1.3439, 1.3489, 1.3609, 1.3643. The Senkou Span B (1.3500) and Kijun-sen (1.3565) 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. There are support and resistance levels on the chart that can be used to take profits on transactions. The UK is scheduled to publish an inflation report on Wednesday, which is the most important report this week. Depending on how much the actual value does not correspond to the forecast (5.4% y/y), there will be a market reaction. An important report on retail sales will be released in the United States, as well as a secondary report on industrial production.
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.
