GBP/USD 1H
The GBP/USD pair weakly moved up on Tuesday, November 17. The upward trend line remains relevant, therefore, you are advised to trade to the upside now. According to yesterday's recommendations, we should have stayed long with the 1.3298 target. Yesterday, this level was not reached, nevertheless, the upward trend is still present. Therefore, the bulls continue to be the dominant traders in the market, and the pound/dollar pair retains excellent prospects for succeeding growth. Take note that the current fundamental background does not support the pound's growth. Therefore, with a high degree of probability, the previous local high near the 1.3300 level may turn out to be the peak of the entire upward trend of recent months. At least now it is very difficult to even guess what basis traders can continue to buy the pound. Nevertheless, long positions remain relevant until the price settles below the trend line. Bears are advised to wait until the trend line has been overcome, which will lead to a trend reversal to a downward trend.
GBP/USD 15M
Both linear regression channels are directed to the upside on the 15-minute timeframe, so there are no signs of the end of the upward trend at the moment. Therefore, the pair may rise again to the resistance level of 1.3298. Further prospects of the bulls will depend on overcoming or not overcoming this level.
COT report
The GBP/USD pair increased by 250 points in the last reporting week (November 3-9). It is not surprising that the pound strengthened, since the US presidential election was held during this period, and the dollar was declining against its main competitors. However, the pound began to grow after this period. In general, the pound has been growing recently. But the Commitment of Traders (COT) reports does not really provide any useful information. Non-commercial traders closed 3,300 Buy-contracts (longs) and opened 1,100 Sell-contracts (shorts). Therefore, they became more bearish, and the net position decreased by 4,400, which is not so small for the pound. Recall that the "non-commercial" group opened a total number of 87,000 contracts. Thus, 4,400 is 5%. As for the general trend among professional traders, the indicators in the chart clearly show that there is no trend at this time. The green line (net position of non-commercial traders) on the first indicator constantly changes its direction. The second indicator also shows the absence of a trend, as professional traders increase the net position, then reduce it. Thus, no long-term conclusions or forecasts can still be made based on the COT report. We recommend paying more attention to technique and foundation.
The fundamental background for the British pound did not change on Tuesday. In principle, you can clearly see this from the way the pair traded yesterday. The movements were smooth, the volatility was low. Bank of England Governor Andrew Bailey's speech did not provide any new and important information, although traders continue to wait for hints from the central bank about the timing of the introduction of negative rates. However, they cannot get this information yet. Not a single macroeconomic report was published on Tuesday. There was also no new information regarding the negotiation of the trade deal. We mean official information. Therefore, traders continue to trade the pair rather sluggishly and wait for important information on the most important topics. And there are now plenty of such both in the United States and in the UK. You just need to wait for one of these topics to explode.
Bailey is set to speak once again on Wednesday. However, we do not expect anything new and interesting from the head of the British central bank. In addition to this event, the publication of the consumer price index for October will also take place. According to experts' forecasts, inflation will accelerate to 0.6% y/y, but this value still remains quite low. It is unlikely that it will be able to provoke new purchases of the British currency. However, the pound does not really need the support of the fundamental background from Britain right now. The negative background from the US and traders' hopes for an agreement in the negotiations between Brussels and London keep the pound afloat.
We have two trading ideas for November 18:
1) Buyers for the pound/dollar pair continue to hold the initiative in their hands. Thus, we advise you to continue buying the pair while aiming for the resistance levels of 1.3298 and 1.3409, if the bulls continue to manage to keep the pair above the trend line. Take Profit in this case will be from 40 to 150 points.
2) Sellers have not been able to take the pair below the trend line. If the price settles below the trend line and below the support area of 1.3160 -1.3184, the trend will change to a downward trend and you can sell the pound/dollar pair while aiming for the Senkou Span B line (1.3081) and support area of 1.3004-1.3024. Take Profit in this case can range from 60 to 120 points.
Hot forecast and trading signals for EUR/USD
Explanations for illustrations:
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.
The material has been provided by InstaForex Company - www.instaforex.com