GBP/USD 5M
The GBP/USD currency pair, simply and calmly, almost with an empty macroeconomic and fundamental background, updated its 2-year lows on Monday. An upward pullback followed in the afternoon, but it does not allow us to assume anything more than a pullback. The price continues to be below the descending trendline, so the downward trend continues. And it can persist for a long time, because the price is far from the trend line. A report on business activity in the service sector was just released in the UK, which did not interest the market at all due to the second assessment of this indicator. Recall that the first estimate is published first, which can impress traders, but the second rarely differs from the first. There was nothing else interesting on Monday, but even in such conditions the pound managed to approach its 37-year lows. We believe that these lows can be updated as early as this week.
In regards to Monday's trading signals, everything was prosaic, since not a single one was formed. As we have already said, the pound is now so low that there are simply no levels to trade here. Of course, levels will appear over time, but so far there are none, and the Ichimoku indicator lines are located much higher than the price. In fact, now traders have only the level of 1.1411 at their disposal, to which the price is striving.
COT reports:
The latest Commitment of Traders (COT) report on the British pound, released yesterday, turned out to be as neutral as possible. During the week, the non-commercial group closed 300 long positions and opened 900 short positions. Thus, the net position of non-commercial traders immediately increased by 1,200. The net position indicator has been growing for several months, but the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above (purple bars below zero = bearish mood). Therefore, the growth of the British pound still cannot count. How can you count on it if the market sells the pound more than it buys? And now its fall has resumed altogether, so the bearish mood of major players in the near future can only intensify. The non-commercial group now has a total of 87,000 shorts and 58,000 longs open. The difference is not as terrifying as it was a few months ago, but it is still noticeable. The net position will have to show growth for a long time to at least equalize these figures. Moreover, COT reports are a reflection of the mood of major players, and their mood is influenced by the "foundation" and geopolitics. If they remain as weak as they are now, then the pound may still be in a "downward peak" for some time. Also remember that it is not only the demand for the pound that matters, but also the demand for the dollar, which seems to remain very strong. Therefore, even if the demand for the British currency grows, if the demand for the dollar grows at a higher rate, then we will not see the strengthening of the pound.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. September 6. The ECB meeting is the key event of the week.
Overview of the GBP/USD pair. September 6. An almost empty week for the pound. What can stop it from falling against the dollar?
Forecast and trading signals for EUR/USD on September 6. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair maintains a downward trend on the hourly timeframe thanks to the trend line. The British currency continues to fall and may continue for some time, as the market seems to have forgotten that you can not only sell, but also buy. But why buy if there is a strong downward trend? The market does not need any specific grounds for trading now, and the pound is updating its local lows almost every day. We highlight the following important levels for September 6: 1.1411, 1.1649, 1.1874. Senkou Span B (1.1698) and Kijun-sen (1.1601) 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. On Tuesday, the UK will release the index of business activity in the construction sector in the second assessment for August, which is unlikely to be of interest to market participants. The US today will publish quite an important index of business activity in the services sector ISM. If its actual value differs from the forecast value (55-55.5), then the market reaction may follow.
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.
