Analysis of GBP/USD 5M
The GBP/USD pair tried to end its bullish correction and resume the downtrend. Once again, there was no volatility or, at least, it was very weak. It was so weak that the price failed to approach any of the levels or lines where one could expect a signal to form. Thus, as we have said before, no movements mean no signals, no trades, and no profits.
There were no reports or events in the UK. The US released a report on durable goods orders, which had virtually no impact on trader sentiment. Although the US dollar slightly rose in the second half of the day, it didn't actually rise due to this report. The British pound remains under weak market pressure. Market participants are not in a rush to sell the British currency, but at the same time, they understand that there are no grounds for buying either. The technical picture of the pound is best seen on the 24-hour timeframe, where a range has been maintained for the past 4 months.
No trading signals were formed on Tuesday, so there were no reasons to open trades either. If the price consolidates below the 1.2605-1.2620 area, it may pave the way for the pair to fall. However, the movements are so weak that after overcoming this area, the price may move in the intended direction for another 10-20 pips. And that will be the end of the movement.
COT report:
COT reports on the British pound show that the sentiment of commercial traders has frequently changed in recent months. The red and blue lines, which represent the net positions of commercial and non-commercial traders, constantly intersect and, in most cases, remain close to the zero mark. According to the latest report on the British pound, the non-commercial group closed 20,700 buy contracts and 3,400 short ones. As a result, the net position of non-commercial traders decreased by 17,300 contracts in a week. The fundamental background still does not provide a basis for long-term purchases of the pound sterling.
The non-commercial group currently has a total of 102,600 buy contracts and 49,400 sell contracts. The bulls have a big advantage. However, in recent months, we have repeatedly encountered the same situation: the net position either increases or decreases, and the bulls or the bears either have the advantage. Since the COT reports do not provide an accurate forecast of the market's behavior at the moment, we have to scrutinize the technical picture. The technical analysis suggests that there's a possibility that the pound could show a pronounced downward movement (descending trend line), and on the 24-hour timeframe, the price has dropped below the Ichimoku indicator lines.
Analysis of GBP/USD 1H
On the 1H chart, GBP/USD continues to form a new downtrend. The economic reports and the fundamental background do not support the British pound at all, and yet it is reluctant to fall. We expect a firm downward movement, and the meetings of the Bank of England and the Federal Reserve have once again proven that there is no basis for the pound to rise against the dollar. The bearish bias persists below the trend line and below the Kijun-sen line.
As of March 27, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2691, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2780) and the Kijun-sen line (1.2688) can also serve as sources of signals. Don't forget to set a Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals.
On Wednesday, the economic calendars of both the UK and the US are completely empty. If volatility was low in the first two days of the week, it is unlikely for it to rise today. The pound continues to lean towards a decline regardless of the fundamental and macroeconomic background. The problem is that the pair shows very weak movements, and it seems that the market doesn't have the desire to trade either.
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;
