GBP/USD 5M
The GBP/USD currency pair tried to follow in the euro's footsteps on Friday, but instead of a powerful correction, it only showed movement in the horizontal channel. All day trading took place between the levels of 1.3362 and 1.3439. Moreover, the price has hit them almost perfectly twice. Thus, traders received two very strong signals on Friday. However, we will talk about them a little later. It should be noted right away that there were no important macroeconomic statistics on Friday in either the UK or the US. Statistics were published in the United States, but after the events of Thursday, no one was interested in such data. Even if we pay attention to the time when data on incomes and expenditures of the US population, orders for long-term goods and the US consumer sentiment index were released, it is clear that the market did not react to them in any way. Thus, geopolitics remains in the first place.
Returning to the trading signals. The first one – for short positions - was formed before the beginning of the European trading session, but it could be worked out, since the price was not far from the point of formation at the time when the session opened. Subsequently, the price dropped to the level of 1.3362, which made it possible for traders to earn about 50 points. An inaccurate rebound "with an error" followed from the level of 1.3362, but it could also be worked out, and it brought about 20-30 more points of profit, depending on where exactly the traders manually closed the deal. Thus, despite the sideways movement on Friday, traders managed to make two profitable trades.
COT reports:
The latest Commitment of Traders (COT) report on the British pound showed an increase in the bearish mood among professional traders. Last week, for the first time in several months, the number of long positions from the non-commercial group exceeded the number of short positions, but this picture was not observed for long. This week it already became known that non-commercial traders started closing longs again and their total number fell to 44,000, while the total number of shorts remained at 48,000. Thus, formally, the mood among the major players is bearish now. However, all events of a geopolitical nature were not included in the latest COT report. That is, the next COT report may show a much stronger change in the net position of each group of traders and a sharp change in mood. In addition, the first indicator in the chart above shows that the mood of commercial and non-commercial traders is now essentially "neutral", since both lines (red and green) are near zero. Thus, although in recent months there has been a tendency to reduce short positions and build up long ones, now there is a complete balance in the market, and geopolitics can affect the balance of power and may affect it in the next few weeks/months. Therefore, no conclusions can be drawn based on COT reports now. Or it doesn't make sense. Unfortunately, the whole world is in tension right now, and comprehensive sanctions will affect the global economy and the mood of traders and investors.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 28. American Nonfarm and European inflation.
Overview of the GBP/USD pair. February 28. Silence in the UK. Smooth preparation for the meetings of the Bank of England and the Fed.
Forecast and trading signals for EUR/USD on February 28. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The technical picture on the hourly timeframe has changed dramatically in just a day. The pair fell by 300 points, and then immediately rose by 140. The market is still in a state of shock, so this week the pair can move very volatile and in any direction. There is no trend now. There is a reaction of traders to geopolitics. We highlight the following important levels on February 28: 1.3170-1.3185, 1.3276, 1.3367, 1.3439, 1.3489, 1.3537, 1.3572. The Senkou Span B (1.3564) and Kijun-sen (1.3445) 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 also support and resistance levels on the chart that can be used to take profits on transactions. No major events are scheduled for Monday in either the US or the UK. However, the markets may start playing back all the news this weekend from the very night. And from Monday, new data on the Ukrainian-Russian conflict will begin to arrive. In particular, negotiations between the delegations of Ukraine and the Russian Federation should be held tonight. Perhaps the parties will agree on something...
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.
