GBP/USD 5M
Yesterday, the GBP/USD currency pair continued the near collapse that began on Friday. We were right when we assumed that volatility would decrease on Monday, and wrong when we assumed that an upward correction would begin. The pound immediately began to fall at the opening of trading and persisted for most of the day. There were no macroeconomic or fundamental events on Monday, and in any case, the fall began at a time when they could not have been in principle. Thus, the pound simply continued to fall on Friday and only by the very end of the day began to form something remotely similar to an upward pullback. However, 70 points up after 400 points down is such a weak pullback. The macroeconomic and fundamental backgrounds for the British pound also did not change on Monday, but now there is still a high probability of the pound's growth – exclusively technical growth due to the need to adjust.
There were few trading signals on Monday, in fact, only two. Both formed in the European trading session near the extreme level of 1.2762. The first time the pair overcame this level, and the second time they bounced off it. However, neither in the first nor in the second case, the pair failed to fall to the 1.2674 level, which was the target. Both times the quotes went down at least 20 points (which made it possible to set the Stop Loss to breakeven), and no more than 45 points. Thus, traders could make a profit on these trades only if they closed them manually.
COT report:
The latest Commitment of Traders (COT) report on the British pound has witnessed a new strengthening of the bearish mood among commercial traders. During the week, the non-commercial group opened 1,300 long positions and 7,100 short positions. Thus, the net position of non-commercial traders decreased by another 6,000. Such changes are significant for the pound. The non-commercial group has already opened a total of 95,700 short positions and only 36,800 long positions. Thus, the difference between these numbers is almost threefold. This means that the mood of commercial traders is now "pronounced bearish". Thus, this is another factor that speaks in favor of the continuation of the pound's decline. Note that in the pound's case, the COT report data very accurately reflects what is happening in the market. According to the pound, the mood of the major players changes every couple of months, but at this time it fully corresponds to the movement of the pound/dollar pair. The net position of the "non-commercial" group has already fallen to the levels where the last round of the pound's fall ended (the green line on the first indicator). Thus, we can even assume that in the coming weeks the pound will try to start a new ascent. However, the current fundamental and geopolitical background does not give good reasons to expect a strong growth of the British currency.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. April 26. The confusion of opinions within the ECB did not allow the euro to grow.
Overview of the GBP/USD pair. April 26. The problems of central banks are now almost the same. Only the states of the economies differ.
Forecast and trading signals for EUR/USD on April 26. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
You can clearly see on the hourly timeframe exactly how the pound has fallen in the last two days. Recall that there was no specific event that pushed the pound's collapse. We believe that it started due to a combination of factors, but it turned out to be so sharp and strong due to the fact that the bears lost their nerves. No matter how you look at it, there are a few more factors now that are in favor of the pound than there are factors in favor of the euro. We highlight the following important levels on April 26: 1.2674, 1.2762, 1.2863, 1.2981-1.2987. The Senkou Span B (1.3060) and Kijun-sen (1.2890) 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. There are no important events and reports scheduled for Tuesday in the UK and the US. One report on orders for durable goods can theoretically provoke a market reaction. A small one. But now traders don't really need macroeconomics to trade actively.
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.
