GBP/USD 5M Analysis.
The currency pair GBP/USD continued its sluggish and weak downward movement yesterday. The price has been corrected for several days already, but it is still located above the Ichimoku indicator lines and a new, already the third or fourth in a row, ascending trend line. Thus, even if the market is not buying right now, it is not selling either. The trend is still going up, and the pound still has a good chance of continuing to rise for no reason. There is no real correction to speak of. Yesterday, there were no important publications or events in the UK or the US, so the reduced volatility is logical. Today, the most important US statistics will be released, but the pair may continue to show illogical movements, as it has been doing for several weeks. The market may continue interpreting any event or reporting unfavorably for the dollar. Thus, today's statistics are more likely to provoke new growth in the pair.
Quite a few trading signals formed on Thursday, but most were false. The pair bounced off the 1.2458 level twice during the European trading session. Still, both signals could be ignored since the pair is predisposed to decline right now, there are no news events, volatility is weak, and the potential stop loss should be placed below the 1.2429 level, making the possible profit/possible loss ratio unfavorable. These two signals still turned out to be false. All subsequent signals around 1.2458 should be ignored. The sell signal around the 1.2429 level should also be skipped, as the critical line lies below. Thus, all trading signals for the day should have yet to be executed.
COT Report:
For the British pound, COT reports have started to catch up with the times. The latest available report is for March 28th. According to this report, the "non-commercial" group closed 0.3 thousand buy contracts and opened 3.3 thousand sell contracts. Thus, the net position of non-commercial traders decreased by 3,000, but overall it continues to grow. Since about seven to eight months ago, the net position indicator has been steadily increasing, but the mood of the major players remains negative. Although the pound sterling is growing against the dollar (in the medium term), it is very difficult to answer why it is doing so from a fundamental point of view. We do not rule out the possibility that a more significant decline in the pound will begin soon. Formally, it has already begun, as we have not seen the pound grow for three months now, but so far, the movement looks more like a flat. It is also worth noting that both major pairs move roughly the same. Still, the net position for the euro is positive and even implies the completion of the ascending impulse soon, while for the pound, it is negative, allowing for further growth. However, the pound has already risen by 2100 points, which is a lot, and continuing growth without a strong downward correction would be illogical. The non-commercial" group currently has a total of 52 thousand contracts open for sale and 28 thousand contracts open for purchase. We remain skeptical about the long-term growth of the British currency and expect it to decline.
GBP/USD 1H Analysis.
The pound/dollar pair maintains its new upward bias on the hourly timeframe. There are still no reasons for the British pound to grow, but market participants ignore this fact. Therefore, the pair may resume moving to the north, even if today's US statistics are strong. Overcoming the 1.2440 level has taken the pair out of a three-month sideways channel. A new trend line has been formed, which also has no particular significance. The price is above the Ichimoku indicator lines. So far, everything suggests a further strengthening of the pound. For April 7th, we highlight the following important levels: 1.1927, 1.1965, 1.2143, 1.2185, 1.2269, 1.2342, 1.2429-1.2458, 1.2589, 1.2659, 1.2762. Senkou Span B (1.2299) and Kijun-sen (1.2398) lines can also be sources of signals. Signals can be "bounces" and "breakthroughs" of these levels and lines. Setting the stop loss level at breakeven when the price moves in the correct direction by 20 points is recommended. During the day, the Ichimoku indicator lines may move, which should be considered when figuring out trading signals. The illustration also shows support and resistance levels that can be used to fix profits on trades. No significant events are scheduled for Friday in the UK, but at least two important reports in the US must be noticed.
Explanations for the illustrations:
Support and resistance price levels - thick red lines near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour chart. They are strong lines.
Extreme levels - thin red lines from which the price previously bounced. They are sources of trading signals.
Yellow lines - trend lines, channels, and other technical patterns.
Indicator 1 on COT charts - the size of the net position of each category of traders.
Indicator 2 on COT charts - the size of the net position for the "non-commercial" group.
