GBP/USD 5M
The GBP/USD currency pair also continued to adjust on Wednesday, as did the EUR/USD pair. The British currency managed to grow by 75 points during the day. And then the announcement of the results of the Federal Reserve meeting followed, after which the US dollar immediately rose by 70 points, and then immediately fell by 90. Thus, there was no unambiguous market reaction, and the US dollar received only temporary support, since no one could be surprised by a 0.25% rate increase. Traders were fully prepared for such a figure and hoped that the rate would be increased by 0.5%. Inflation in the US remains very high and it will have to be fought for a very long time if the rate is raised by 0.25% once every six weeks. Thus, dollar bulls were very disappointed. Well, there was nothing interesting at all in the UK yesterday.
As we expected, volatility has increased, and both major currency pairs have shown several sharp reversals. As for trading signals, there is not much point in considering them. If more or less adequate movement was observed in the first half of the day, then a "swing" began at the US trading session near the level of 1.3082 and the Kijun-sen line. The pair crossed these lines almost a dozen times, so the most that traders could open was one transaction, which undoubtedly turned out to be unprofitable. Now it is necessary for the market to calm down after the Fed meeting, but it is unlikely to be possible to do this today, since the results of the Bank of England meeting will be summed up today. So we can expect a new "roller coaster".
COT report:
The latest Commitment of Traders (COT) report on the British pound showed an increase in the "bearish" mood among professional traders. However, in general, the mood of major players has changed too often in recent months, which is clearly seen by the two indicators in the chart above. At the moment, the number of open long positions is less than the number of short positions by 13,000. Although a week ago their numbers were almost the same. We can conclude that the major players cannot make a decision on exactly how to trade the pound. Of course, with the beginning of the military operation in Ukraine, a lot has changed for traders and investors. There was outright panic in the markets for several days. But even now, when enough time has passed to calm down, the markets are still in an excited state. In addition, strong demand for the US dollar also affects the movement of the pound/dollar pair, so COT reports do not always reflect what is actually happening in the market. Although the reports on the British pound are at least a little consistent. The green line of the first indicator (the net position of the "non-commercial" group) indicates that the major players are starting to look at the short positions on the British pound again. And since this line is not far from the zero mark, the pound has a lot to go down. In general, now most factors speak in favor of the growth of the US currency and COT reports are just one of them. At this time, geopolitics is the most important factor.
We recommend that you familiarize yourself with:
Overview of the EUR/USD pair. March 17. Kiev and Moscow have finally begun to approach a peace agreement.
Overview of the GBP/USD pair. March 17. Reuters believes that the Bank of England will not stop at 1% of the key rate.
Forecast and trading signals for EUR/USD on March 17. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The price has settled above the descending trend line on the hourly timeframe, but everything can change today, since the fundamental background will remain strong during the day, and European markets have not yet had the opportunity to work out the results of the Fed meeting. Thus, the technical picture is not so important now. It is important to understand how the results will be accepted by both central banks, what will be the final reaction of traders to them and where the pair will be after the markets have fully worked out all the information received. We highlight the following important levels for March 17: 1.3000, 1.3082, 1.3194, 1.3273. The Senkou Span B (1.3212) and Kijun-sen (1.3095) 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. Only the BoE meeting is scheduled for Thursday in the UK, which will be the key event of the day, which may be followed by no less strong reaction than the Fed meeting last night. A single report from overseas is unlikely to attract the attention of traders.
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.
