On the hourly chart, the GBP/USD pair attempted to continue the upward process towards the corrective level of 0.0%–1.2892 on Monday, but it was unsuccessful. This does not necessarily mean that the British pound cannot continue to grow today or on Thursday. A rebound from the support zone of 1.2788–1.2801 will favor the British currency and resume growth. Consolidation below the 1.2788–1.2801 zone will allow the dollar to strengthen towards the support zone of 1.2690–1.2705.
The wave situation remains unchanged. The last downward wave (which started on June 12) managed to break the low of the previous wave, while the new upward wave (currently forming) has yet to reach the peak of the previous wave at 1.2859. Thus, the trend for the GBP/USD pair remains "bearish." I am cautious about concluding a "bearish" trend as bears still show regular weakness, and the news background often makes further attacks impossible. Last week, they had to retreat due to news from the US. The "bearish" trend will be officially broken after surpassing the peak of the last upward wave from June 12 – 1.2859.
There was no news background on Monday, but bulls continued to attack just in case. Today, Jerome Powell will speak in Congress, and I see no reason for him to soften his statements regarding monetary policy. Thus, a decline in quotes is more likely today, but everyone understands that it is impossible to predict what Powell will talk about. One must be ready for any developments in the second half of the day. The dollar may easily continue its decline this week if Powell's information and the inflation report again fail to satisfy traders.
On the 4-hour chart, the pair turned in favor of the British currency after four rebounds from the 1.2620 level and then consolidated above the corrective level of 61.8%–1.2745. The 4-hour chart shows no obstacles to further growth of the British currency up to 1.3044. Bears could not even break the simplest level. Currently, the British currency has good graphical prospects.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category of traders became slightly less "bullish" over the past reporting week. The number of long positions held by speculators decreased by 3,373 units, while the number of short positions increased by 200. Bulls still hold a solid advantage. The gap between the long and short positions is 44 thousand: 102 thousand versus 58 thousand.
The British currency still has prospects for a decline. Graphical analysis has given several signals of a "bullish" trend break, and bulls cannot attack forever. Over the past three months, the number of long positions has grown from 98 thousand to 102 thousand, and the number of short positions has grown from 54 thousand to 58 thousand. Over time, major players will continue to reduce long positions or increase short positions, as all possible factors for buying the British pound have already been exhausted. However, it should be remembered that this is just an assumption. Graphical analysis still indicates the weakness of bears, who cannot even "take" the 1.2620 level.
News Calendar for the US and UK:
USA – Speech by Federal Reserve Chairman Jerome Powell (14:00 UTC).
The economic events calendar contains only one entry on Tuesday. The news background may strongly influence market sentiment in the second half of the day.
Forecast for GBP/USD and Trading Advice:
Sales of the British currency are possible today upon closing below the zone of 1.2788–1.2801, targeting 1.2690–1.2705. Purchases could be considered upon rebounding from the zone of 1.2611–1.2620 on the hourly chart, targeting 1.2690–1.2705. Then, upon closing above the zone of 1.2690–1.2705, with a target of 1.2788–1.2801. Both targets have been reached. New purchases are possible upon rebounding from the zone of 1.2788–1.2801, targeting 1.2892.
The Fibonacci levels are built between 1.2036–1.2892 on the hourly chart and between 1.4248–1.0404 on the 4-hour chart.
