The wave situation has shifted slightly. The latest upward wave broke the peak from June 4th, while a new downward wave managed to break the low of the wave from June 10th. Thus, the trend for the GBP/USD pair has shifted to bearish. I am cautious about concluding that a bearish trend has started, as bulls have not entirely left the market. The emerging advantage of bears could easily be broken. The new upward wave could turn out to be corrective, after which a new downward wave could form, maintaining the bearish trend. However, the advantage of bears in the market at this time (if it exists at all) is very weak.
The information background on Friday did not interest traders. Throughout the day, movements could have been more active, making it extremely difficult to determine who dominated the market. By the end of the day, the pound fell by 20 points, indicating formal dominance by bears. However, 20 points is simply market noise. The same applies to today's rise in the pair. A 15-point increase from the day's opening level is so small that no conclusions should be drawn. Business activity indices in the UK as of June showed contrasting values. The service sector slowed significantly, but the manufacturing sector grew. Retail sales volumes in May exceeded traders' expectations. In general, on Friday, the pound could have shown growth or decline but ultimately showed nothing. Trader activity may remain very low this week, as the information background will be very weak and, on some days, simply absent.
On the 4-hour chart, the pair made a turnaround in favor of the US dollar and settled below the ascending trendline. However, the rebound of the pair's rate from the level of 1.2620 has already worked in favor of the pound and initiated an upward movement, which looked odd on the hourly chart. Therefore, for some time, bulls may conduct sluggish attacks towards the nearest levels on the hourly chart. If the pair's rate consolidates below the level of 1.2620, the likelihood of further decline in the pound towards the next level of 1.2450 will increase. There are no imminent divergences today.
Commitments of Traders (COT) report:
The sentiment of the "Non-commercial" trader category over the past reporting week has become even more bullish. The number of long positions held by speculators increased by 8182 units, while the number of short positions decreased by 729 units. Bulls once again hold a solid advantage. The gap between the number of long and short positions is 52 thousand: 110 thousand long positions versus 58 thousand short positions.
However, in my view, the British pound still has excellent prospects for decline. Graphical analysis has provided several signals of a break in the bullish trend, and bulls cannot constantly attack. Over the last three months, the number of long positions has increased from 102 thousand to 110 thousand, while the number of short positions has risen from 44 thousand to 58 thousand. I believe that over time, large players will continue to unwind their buy positions or increase their sell positions, as all possible factors supporting purchases of the British pound have already been exhausted.
Calendar of News for the US and UK:
On Monday, the economic events calendar does not include any interesting entries. The impact of the information background on market sentiment will be absent today.
Forecast for GBP/USD and Trader Advice:
Sales of the British pound were possible upon closing below the zone of 1.2690–1.2705 with a target of 1.2611. The price fell just short of this target. Purchases can be considered on a rebound from the level of 1.2611 (or 1.2620) with a target of 1.2690.
Fibonacci levels are set based on 1.2036 – 1.2892 on the hourly chart and 1.4248 – 1.0404 on the 4-hour chart.
