GBP/USD 1H
The GBP/USD pair abruptly and unexpectedly resumed the upward movement on Thursday, although days earlier it had settled below the upward trend line and below the critical line. However, this is the pound. It ignores statistics, fundamentals, technical signals. A month ago, the pair was trading in the "swing" mode, two months ago - in the "high-volatility swing" mode. The upward trend is still present in the long term, but it is extremely difficult to reject it every day, realizing that most technical signals are false, and movements are absolutely crazy and illogical. Thus, we continue to believe that the pound/dollar is now the most inconvenient pair for trading. Yesterday we advised you to sell the pair, since it settled below the critical line. This signal turned out to be false, but it is good that traders could close short positions in time with only a small loss, no more than 12 points. Furthermore, out of the blue there was an increase of 135 points. Anything can be expected again today. Logically, the pair should now correct itself, but we will not be surprised if the upward movement continues with renewed vigor without any correction.
GBP/USD 15M
Both linear regression channels turned to the upside on the 15-minute timeframe, so the short-term trend is up again. The resistance level of 1.3984 has been reached perfectly, now the bulls need to overcome it in order to continue their ascent to the three-year highs.
COT report
The GBP/USD pair rose by 80 points during the last reporting week (February 2-8). Yes, the pound is not in a rush to rise. The price increases are very moderate - 50-80 points per week, but they have been stable over the past five months. The latest Commitment of Traders (COT) report showed a major shift in the mood of the big players. A group of non-commercial traders opened new 6,500 thousand buy contracts (longs) and closed 4,600 thousand sell contracts (shorts) during the reporting week. Thus, the net position of professional traders has increased by 11,000 contracts. Considering the fact that the total number of contracts for the "non-commercial" group before the current changes was about 100,000, then 11,000 contracts for changing the net position is a lot. Most importantly, non-commercial traders have become more bullish. Consequently, the pound can continue to rise in the long term. The indicators also show a very high probability of succeeding growth. The green and red lines, which represent the net positions of the non-commercial and commercial groups, continue to move away from each other, which indicates a strengthening trend. Professional traders believe in the pound despite the fact that no growth factors for this currency come from the UK.
No important news or reports in the UK over the past day. Nevertheless, the pound rose by 140 points that day, confirming its intention to continue its speculative growth. Thus, by and large, foundation and macroeconomics are absolutely irrelevant now. It is important whether or not most traders want to continue investing in the pound. One gets the impression that sooner or later, the British currency will collapse, as it is already extremely overbought.
The UK will also publish PMIs in the services and manufacturing sectors on Friday. In addition, a report on retail sales will be released. In theory, any of these reports could have an impact on the pair's movements if its actual value differs greatly from the forecast. But we wouldn't count on it too much. Traders continue to buy the pound based solely on future profits. Buying the pound now is based on hype, like buying bitcoin. Bitcoin is bought because it is growing, and it is rising because it is being bought. It's the same with the British currency.
We have two trading ideas for February 19:
1) Bulls quickly returned the initiative to their own hands. Thus, the upward movement has been resumed, but it is not known how long it will continue. The pair is now moving very illogically and ignores technical signals. Therefore, a correction can begin at any time. In case of a clear rebound of the price from the Kijun-sen line (1.3888), it will be possible to consider options for opening long positions with targets at the levels of 1.3917, 1.3951 and 1.3984. Take Profit in this case can be up to 75 points.
2) Sellers consolidated the pair below the trend line and immediately gave up and retreated from the market. Thus, new short positions are not recommended now, although the pair may start a new round of the downward correction.
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