GBP/USD 5M
The GBP/USD currency pair did not stand in one place on Monday amid an empty calendar of macroeconomic events, but did not start trading inside the horizontal channel of 1.1716-1.1874, within which it had spent a few days before. Instead, it immediately rushed down and renewed its 2-year lows. Thus, the pair's new low is now at 1.1649. The descending trend line remains relevant, so there is no trend or question right now. For the first time in a long time, the euro and the pound show different movements, and this is very interesting, because over the past six months, it was the pound that showed greater resistance against the dollar than the euro. And now it is the euro that shows a stronger fall than the British currency. There were no important macroeconomic statistics on Monday either in the US or in the UK. Therefore, the pair's entire movement was purely technical.
Unfortunately, everything in regards to Monday's trading signals were bad. The beginning of the upward movement and all the downward movement was missed, since in the first case, no signals were formed during the European trading session, and in the second case, all the movement fell on the Asian trading session. Signals began to form only at the US session, when the price returned to the extreme level of 1.1716. As of yesterday, there was not a single level below the level of 1.1716, so there was basically nothing to trade there. When a pair is at its extremes for a long period of time, this is a common situation. The first and second trading signals were buy signals. They duplicated each other, so only one long position had to be opened. However, in total, the pair was able to go up only 17 points, which was not enough to set Stop Loss to breakeven. The trade closed at a loss when the price fell below 1.1716. One should have opened a short position with this signal, but this time the price failed to go in the right direction for at least 20 points. But here at least the deal was closed at breakeven manually in the late afternoon.
COT report:
The latest Commitment of Traders (COT) report on the British pound turned out to be quite interesting. During the week, the non-commercial group opened 14,700 long positions and 9,500 short positions. Thus, the net position of non-commercial traders increased immediately by 5,200. Despite the growth of this indicator for several months now, the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above (purple bars below zero = bearish mood). To be fair, in recent months the net position of the non-commercial group has been constantly growing, but the pound shows only a very weak tendency to rise. And even then, only from time to time. And now its fall has resumed altogether, so the bearish mood of major players may again begin to intensify in the near future. The non-commercial group now has a total of 86,000 short positions and 58,000 long positions open. The difference is no longer as daunting as it was a few months ago, but it's still there. The net position will have to show growth for a long time to at least equalize these figures. Moreover, COT reports are a reflection of the mood of major players, and their mood is influenced by the "foundation" and geopolitics. If they continue to be as disappointing as they are now, then the pound may still be on the "downward peak" for a long time. We should also remember that the demand for the pound is not the only thing that matters, but also the demand for the dollar, which seems to remain very strong. Therefore, even if the demand for the British currency grows, if the demand for the dollar grows at a higher rate, then the pound will not strengthen.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. August 30. The EU inflation report is one of the key events of the week.
Overview of the GBP/USD pair. August 30. The pound has renewed its two-year lows, and the market is waiting for NonFarm Payrolls.
Forecast and trading signals for EUR/USD on August 30. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
The pound/dollar pair maintains a downward trend on the hourly timeframe thanks to the trend line. Thus, after a slight rollback upward, the British currency may resume to fall. The price is below the Ichimoku indicator lines, and there are no signs of a flat now. We highlight the following important levels for August 30: 1.1649, 1.1716, 1.1874, 1.1974, 1.2007. The Senkou Span B (1.1982) and Kijun-sen (1.1774) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. The macroeconomic calendars for both the UK and US contain absolutely nothing important on Tuesday. Thus, there will be nothing to react to today. Technical analysis and signals will be in first place in terms of importance.
Explanations for the chart:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the non-commercial group.
