Analysis of GBP/USD 5M
GBP/USD traded with a slight bearish bias on Friday, almost flat. Traders found no reason to initiate a downward correction after a 300-pip rise. However, this is not surprising as we have been talking about the absence or insignificance of corrections for the past 5-6 months. So we're still seeing the same thing. The pound continues to rally, disregarding fundamental and macroeconomic factors, and refuses to enter a correction. Of course, this does not mean that the pair should not be traded. On the contrary, we have a strong uptrend that can and should be capitalized on. However, there are often situations where the dollar should be strengthening, but instead, it falls again. The only option is to strictly trade according to the trend.
It makes no sense to analyze the signals on Friday. There were quite a few entry points, all around the 1.3119 level. Traders could only execute the first two signals during the European trading session. In both cases, the price failed to move even 20 pips in the right direction. Therefore, it made no sense to trade further. Today, we may also observe a flat or something like a near-flat movement. There is a higher chance of seeing an intraday trend during the US session.
COT report:
According to the latest report, the non-commercial group of traders opened 15,200 long positions and 7,400 short ones. Thus, the net position of non-commercial traders increased by 7,800 positions in a week but in general it continued to rise. The net position has been steadily growing over the past 10 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term. There are no drivers for opening new long positions. However, there are no technical signals for short positions yet.
The British currency has already grown by a total of 2,800 pips. Without a downward correction, the continuation of the uptrend will be illogical. However, we have observed this type of movement for a long time now. The Non-commercial group of traders has 111,600 long positions and 53,600 short ones. I remain skeptical about the long-term growth of the pound sterling but speculators continue to buy because the pair is growing. Usually, BTC shows such movements.
Analysis of GBP/USD 1H
On the 1H timeframe, the pound/dollar pair maintains an uptrend. It is rising rather rapidly. According to technical indicators, the pound sterling is likely to climb higher. Traders also use every opportunity to sell the US dollar. There are no signs of the end of an uptrend. Naturally, such a movement cannot last forever. However, it is very difficult to say when the correction will begin as traders prefer to ignore macro stats.
On July 17, traders should pay attention to the following key levels: 1.2693, 1.2762, 1.2863, 1.2981-1.2987, 1.3050, 1.3119, 1.3175, 1.3222, 1.3273. The Senkou Span B line (1.2762) and the Kijun-sen line (1.2995) lines can also provide signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits.
On Monday, the economic calendars in both the UK and the US are empty. Thus, there is a high probability of an extension of the low-volatility flat. A correction is looming, but if the market refuses to take profit on long positions and opens new ones, we will not see a correction.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
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 is the net position size for each category of traders;
Indicator 2 on the COT charts is the net position size for the Non-commercial group.
