GBP/USD 5M
The GBP/USD currency pair traded identically to the euro/dollar pair on Tuesday, which once again proves the similarity of these two pairs, as well as the fact that a lot of the currency market now depends on America and the US dollar. However, the British pound traded upward in the European trading session, unlike the euro, but in the US it was followed by a powerful jump, which took a little more than an hour. Thus, the pound/dollar again showed super volatility over 200 points on a completely empty day. We have already said earlier that the pound, from a technical point of view, it has a better chance of growth than the euro. However, now, when the pairs move almost identically every day, there is an assumption that either everything really depends only on the dollar, which the market buys or sells, which leads to almost identical movements of both pairs, or one European currency pulls the other. Either up or down. However, we still recall that when the pound fell by 1000 points, and then grew by 1100 points, the euro did without similar jerks.
Only two trading signals were formed on the 5-minute time frame yesterday. The first one is when the 1.1354 level is overcome. You should have traded with a long position. The price rose to the level of 1.1442, overcame it and stopped. It was after overcoming this level, in the late afternoon that it was necessary to close longs manually. Profit amounted to at least 100 points.
COT report:
The latest Commitment of Traders (COT) report on the British pound showed a new growth in bearish sentiment. In the given period, the non-commercial group closed 8,600 long positions and opened 3,400 short positions. Thus, the net position of non-commercial traders fell by 12,900, which is quite a lot for the pound. 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 remains on a downward trend 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 91,000 shorts and 40,000 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? As for the total number of open longs and shorts, here the bulls have an advantage of 25,000. But, as we can see, this indicator does not help the pound too much either. 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 26. Four more explosions occurred in the area of the Nord Stream pipelines.
Overview of the GBP/USD pair. October 26. The British prime ministerial election ended dull and prosaic.
Forecast and trading signals for EUR/USD on October 26. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair is trading very inadequately on the hourly timeframe. The price often changes the direction of movement and travels impressive distances in each of them. However, the upward trend still recovered, although it also does not look quite clear. We believe that the upward bias may persist, but the pair may regularly show strong declines. On Wednesday, trading could be performed at the following levels: 1.1212, 1.1354, 1.1486, 1.1649, 1.1760. The Senkou Span B (1.1179) and Kijun-sen (1.1265) lines can also be sources of signals. Signals can be bounces and breakouts 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 positions. There are no major events or reports scheduled for today in the UK and US. Thus, there is a possibility that we will see a "swing" again. There are practically no important macroeconomic events left for the pound and the dollar this week, so until the end of the week, traders will have practically nothing to pay attention to. The probability of a flat is also growing.
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.
