Analysis of GBP/USD 5M
GBP/USD was flat on Monday. The price dipped towards the level of 1.3050, but the sideways movement did not change the trend. Over the course of two days, the pair has corrected by 100 pips after rising by 555 pips in the past two weeks. Some may argue that 100 pips can also be considered as a correction, but we believe that the pound has not corrected at all in the last 6 months. The size of the corrective phases are almost always purely formal. Even Bitcoin corrects more frequently than the British currency. Thus, the pound continues its baseless rally. And this happened in the absence of influential economic releases in both the US and the UK.
There was only one entry point and it formed at the beginning of the US session. The pair bounced twice from the level of 1.3050, with the signals confirming each other. Traders could have entered a long position at that point. By the end of the day, the pair moved in the right direction by a mere 15 pips, which traders could have captured by closing the trade manually in the evening. At least this helped offset a small loss. The volatility totaled 57 pips. With such a strong movement, there is not much else to discuss.
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 chart, 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 18, 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 (1.2798) and Kijun-sen (1.3021) 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.
There is no economic data scheduled in the UK calendar on Tuesday. The US will release reports on industrial production and retail sales. Both reports are secondary of importance, and even stronger data last week did not help the dollar in the slightest. Currently, the market is not ready to sell. The market may react to Tuesday's reports, but it is unlikely to provide significant help to the USD.
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.
