GBP/USD 15M
Both linear regression channels are directed slightly to the downside on the 15-minute timeframe, but more sideways. Thus, we conclude that the flat prevails in the market. Therefore, you need to build on the boundaries of the horizontal channel 1.3635 and 1.3745 and trade on rebounds from them.
GBP/USD 1H
The GBP/USD pair rebounded three more times from the 1.3745 high on Friday and Monday. A turn of the downward movement began each time, which ended either near the 1.3700 level, or just below the critical line (1.3692). One way or another, each time the upward movement began again and the price could not overcome the 1.3745 level. In general, the pair continues to trade between 1.3635 and 1.3745, that is, in a horizontal channel with a width of 110 points. It has been in it for ten full working days. In our last review, we recommended buying the pound if the price settles above 1.3745. Accordingly, the last two trading days should have been done without long positions. But we advised you to trade with short positions if the price rebounds from 1.3745. There were three of them, respectively, traders could open short positions three times. As targets, we named the 1.3700 level, which was reached three times, as well as the 1.3635 level, which was never reached. Therefore, it all depends on where our readers closed their short positions. However, in any case, at least you could obtain a minimal profit on these deals, since the price did not even rise above the 1.3745 level. Therefore, it could not even demolish Stop Loss orders (if there were any).
COT report
The GBP/USD pair rose by 80 points during the last reporting week (January 19-25). It doesn't seem like a lot, but the growth is stable. But the latest Commitment of Traders (COT) report was disappointing again. Recall that over the past two to three months, the vast majority of reports indicated minimal changes. At the same time, it cannot be said that the mood of large traders has been stable all this time. The green and red lines of the first indicator, which graphically reflect the change in the net positions of the "non-commercial" and "commercial" groups, clearly indicate frequent changes in mood. These lines are constantly changing their direction of movement, which means that the big players themselves do not know what to do with the pound now. We also said earlier that the issue is not only about the demand for the pound, but also the demand for the dollar, which the COT report does not reflect. If, in theory, the demand for the pound falls, but the demand for the dollar falls, then this does not cause the pound to fall. We have seen approximately the same picture in recent months. Professional traders are rushing from side to side, and their mood cannot be called stable bullish, however, the pound is growing steadily and has grown by 10 cents only in the last 3-4 months. During the reporting week, commercial traders opened 2,500 new buy contracts (longs) and 6,500 sell contracts (shorts). Therefore, their net position decreased by 4,000, and the mood of non-commercial traders became more bearish. However, this still has no effect on the pound.
The first trading day of the new working week did not disappoint market participants. The pound started to fall in the morning after rebounding from the 1.3745 level. So, with a high degree of probability, statistics have nothing to do with it. The UK published its index of business activity in the manufacturing sector, and it exceeded forecasts and reached 54.1, which was supposed to cause the pound to rise, and not fall. But the US statistics turned out to be contradictory, but on the whole they were also quite strong. The Markit Manufacturing PMI exceeded forecasts and rose from the previous period to 59.2, while the ISM index fell from 60.5 to 58.7, but this is still a very high value. Thus, nothing should have upset the dollar buyers yesterday.
Macroeconomic and the fundamental background will be weak for the pound/dollar pair on Tuesday. But traders are ignoring most of the news and events anyway, so they will most likely continue to trade on technical signals. The key level is 1.3745.
We have two trading ideas for February 2:
1) The price left the rising channel and is currently trading in a horizontal channel. Therefore, you are advised to trade bullish when the price surpasses the 1.3745 level with targets at the resistance levels of 1.3768 and 1.3837. Take Profit in this case will be up to 70 points. You can also open long positions when the price rebounds from the Senkou Span B line (1.3632) or the resistance level 1.3635 with targets at the levels of 1.3700 and 1.3745.
2) Sellers tried to start a new downward trend, but they cannot overcome the 1.3606-1.3626 area. Nevertheless, in case the price rebounds from the 1.3745 level, we recommend selling the pair again with the targets at the support levels of 1.3700 and 1.3635. Take Profit in this case will be up to 100 points. The downward movement is not a trend, so if you trade, then do so in small lots.
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