Analysis of GBP/USD 5M
GBP/USD traded marginally lower after US retail sales exhibited growth in June. Its actual value did not exceed the forecast, but the previous month's value was revised upwards. Therefore, one could say that this report would have been good for the dollar. But as usual the market simply refused to buy the greenback. Recall that all the negative reports from the US weighed heavily on the dollar. The first positive report provoked the dollar's growth by 20 pips, which was offset by the market in just a few hours.... Therefore, the weak data is not the problem, but the market's lack of desire to buy the dollar.
From a technical perspective, the upward trend is still intact on the hourly timeframe. The price is clearly located inside the ascending channel. Today, the UK inflation report will be published. The market expects the Consumer Price Index to slow down even more to 1.9% in annualized terms. Do you think this report will be a reason to sell the British currency? We doubt it...
Thus, the pair continues to rise, but there are no clear reasons for this. Six months ago, we paid attention to the pound's illogical rise, but nothing can be done about it, since the market is no longer ruled by news, reports and retail traders.
Only one trading signal was generated on Tuesday, and volatility left much to be desired. At the beginning of the US session, the price bounced off the level of 1.2981 with an error of 3 pips, after which it managed to fall "as much as" 25 pips. And by the end of the day it managed to return to the level of 1.2981. Therefore, this signal definitely did not bring much profit.
COT report:
COT reports on the British pound show that the sentiment of commercial traders has frequently changed in recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, constantly intersect and mostly remain close to the zero mark. According to the latest report on the British pound, the non-commercial group opened 28,600 buy contracts and 5,900 short ones. As a result, the net position of non-commercial traders increased by 22,700 contracts over the week. Thus, sellers failed to seize the initiative once again.
The fundamental background still does not provide a basis for long-term purchases of the pound sterling, and the currency has a good chance to resume the global downward trend. However, the price has already breached the trend line on the 24-hour timeframe at least twice. The pound sterling is rising despite almost everything, and such a movement is extremely difficult to predict.
The non-commercial group currently has a total of 135,300 buy contracts and 50,600 sell contracts. The bulls are taking the lead in the market, but aside from the COT reports, nothing else suggests a potential rise in the GBP/USD pair. And such a strong advantage suggests a potential change in trend.
Analysis of GBP/USD 1H
On the 1H chart, GBP/USD continues to show a bullish bias. Now traders have an ascending channel at their disposal, and almost all the macro data provokes traders to open long positions. In other words, the US hasn't released a lot of good reports lately. And when it does, the market chooses to ignore these reports that should have supported the dollar. Therefore, we can only expect the dollar to strengthen when the price consolidates below the ascending channel.
As of July 17, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2691-1.2701, 1 ,2796-1.2816, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2781) and Kijun-sen (1.2916) lines 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.
Today, the UK will publish a fairly important inflation report for June, but it has virtually no meaning for the GBP/USD pair. If inflation falls again, this wouldn't exert much pressure on the pound. If inflation accelerates a bit, this will be a new formal reason to buy the pound. And it doesn't matter that the Bank of England may begin to lower rates in just two weeks.
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;
