GBP/USD 5M
The GBP/USD currency pair also continued to fall without a twinge of conscience on Tuesday. Despite the fact that there were no important news or report in either the UK or the US. Even in geopolitical terms, there were no truly important events. It is unlikely that the market could have reacted so strongly to the news of several explosions in Transnistria. Or about the desire to join Sweden and Finland in NATO. Thus, we tend to believe that the market has simply released itself from the brakes. The bears realized that the bulls were not going to interfere in the situation at all, so they again took the initiative into their own hands. Moreover, all global factors continue to support the US dollar. So why not continue buying it, selling the pound along the way?! The downward trend naturally continues at this time, there is no doubt about it. It is very difficult to guess as to what levels the pound may eventually fall.
There were several trading signals during the past day. The first sell signal was almost perfect - a rebound from the level of 1.2762, after which the pair went down 60 points and rebounded from the 1.2674 level. This rebound should have been interpreted as a buy signal, so short positions should have been closed and longs should have been opened. However, the buy signal turned out to be false and we ended up closing with a loss of about 30 pips when the price fell below 1.2674. However, at the same moment, new short positions should have been opened, which brought traders another 60 points of profit. This deal should have been closed manually in the evening, as the nearest level below 1.2674 is very far away.
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 27. Olaf Scholz is unhappy in Germany. The Chancellor may resign.
Overview of the GBP/USD pair. April 27. Finland and Sweden already have one foot in NATO. Moscow threatens. New geopolitical conflict in the Baltics?
Forecast and trading signals for EUR/USD on April 27. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
You can clearly see on the hourly timeframe how much the pound has fallen in the last three days. Recall that there was no specific event that triggered the pound's collapse. We believe that it began due to a combination of factors, but it turned out to be so sharp and strong due to the fact that the bears simply lost their nerve. No matter how you look at it, there are now slightly more factors in favor of the pound than factors in favor of the euro. So, while the pound continues to collapse, and an upward correction is brewing, when will it begin? We highlight the following important levels for April 27: 1.2251, 1.2674, 1.2762, 1.2863, 1.2981-1.2987. Senkou Span B (1.3060) and Kijun-sen (1.2845) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. There are no important events or reports scheduled for Wednesday in the UK and the US. However, the British pound, even without macroeconomics, falls with pleasure every day, and traders without macroeconomics are happy to actively trade the pair.
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.
