GBP/USD 5M
Yesterday, the GBP/USD currency pair also had time to thoroughly "fly" from side to side. A rather strong upward movement began, within which the pound added 150 points, but in the afternoon it lost about the same amount. As in the case of the euro, macroeconomic statistics were not the reason for such movements. Most likely, even the news of Liz Truss' resignation was not the reason. Or, at least, it is impossible to logically explain why the movements were the way they were. We can even say that the market reacted, but it is very difficult to explain why it reacted this way. And even if it is difficult to explain, it is even more difficult to predict. As a result, the day ended between the Senkou Span B and Kijun-sen lines. Consolidating below the Senkou Span B will return the pound to the downside. In principle, we fully assume that the euro and the pound will resume their decline in the medium term. There are too many "buts'' preventing their succeeding growth.
In regards to trading signals, there was no deficit on Thursday. The pair frequently changed direction and moved in a volatile manner. The first buy signal near the level of 1.1212 turned out to be false. The price failed to go up even 20 points, so the position closed at a loss. This was followed by a signal to sell near the same level, after which the coveted 20 points down had been reached. The second position was closed by Stop Loss at breakeven. The third signal near the same level should no longer be worked out. But it was possible to work out two signals near the Kijun-sen line. True, they also did not bring any profit, and both transactions were also closed by Stop Loss at breakeven.
COT report:
The latest Commitment of Traders (COT) report on the British pound showed a new weakening of the bearish mood. During the week, the non-commercial group opened 6,900 long positions and closed 3,400 short positions. Thus, the net position of non-commercial traders increased by 10,300, which is quite a lot for the pound. One might assume that the actions of the big players and the movement of the pound are finally starting to coincide, as the pound has generally gained over the last period of net growth, but we are worried that this may be another "false alarm". The net position indicator has been growing slightly in recent weeks, but this is not the first time it has risen, but the mood of the big players remains "pronounced bearish" and the pound continues to fall in the medium term. And, if we recall the situation with the euro, then there are big doubts that based on the COT reports, we can expect a strong growth from the pair. How can you count on it if the market buys the dollar more than the pound? The non-commercial group now has a total of 88,000 shorts and 49,000 longs open. The difference, as we see, is still very large. The euro cannot show growth if the major players are bullish, and the pound will suddenly be able to grow if the mood is bearish? We remain skeptical about the long-term growth of the British currency, although there are still certain technical reasons for this.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. October 21. Every day is the same! The market is consolidating around the 98th level.
Overview of the GBP/USD pair. October 21.The "pendulum" is slowing down, the political absurdity in the UK is gaining momentum.
Forecast and trading signals for EUR/USD on October 21. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair may go below the Senkou Span B line on the one-hour chart in the coming hours. If this happens, then the chances for a new round of downward movement will increase dramatically. A rebound from the Ichimoku cloud may provoke a new growth for the pair. On Friday, trading could be performed at the following levels: 1.0930, 1.1212, 1.1354, 1.1486, 1.1649. Senkou Span B (1.1207) and Kijun-sen (1.1291) lines can also be sources of signals. Bounces and breakouts of the extreme levels and lines could act as signals. Don't forget about stop-loss orders, if the price covers 15 pips in the right direction. 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 positions. The UK retail sales report will be released, which is not important. On the other hand, we have nothing scheduled for the US. However, let us recall that the pound continues to trade in a very volatile manner, which means that strong movements with frequent reversals can be observed today as well.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.
