GBP/USD 5M
The GBP/USD pair initially moved down, then up on Tuesday. But such changes did not prevent traders from working out the movements at all, since they were accompanied by perfectly accurate signals. It rarely happens that signals are so accurate. Let's start analyzing the previous day. Overnight trading, as often happens, passed with low volatility, albeit with a slight decrease. The first signal was formed at the very beginning of the European trading session. The bears managed to build on the success of their Asian counterparts and overcome the 1.3857 level. Thus, at this point, traders could open short positions with the nearest target - the support level of 1.3809. This level was perfectly reached, point to point and brought 35 points worth of profit. This was followed by a rebound from the 1.3809 level, which had to be interpreted as a buy signal, because there was no ambiguity here. The bears took short gains around 1.3809 and left the market, allowing the bulls to enter. An upward movement began with the nearest target (1.3857), which is where the fall started in the morning, and it was also ideally reached and immediately surpassed. Traders could take profits near it, or they could stay in long positions, since there were no signs of a rebound from this level either. Under the first option, traders could make another 35 points worth of profit. If a long position was closed, then after overcoming the 1.3857 level, it was possible and necessary to open new longs with the Kijun-sen line (1.3922) as the target, which has not yet been worked out. Consequently, long positions remain open and are already in profit by around 35 points. Stop Loss for this trade should already be set to breakeven. Two reports of slight importance were published in America during the US session (they are marked with numbers 1 and 2 in the chart), but traders did not react to them, although formally the upward movement continued, so we can assume that the markets continued to sell the dollar on the basis of weak data on industrial production and retail sales.
GBP/USD 1H
The downward trend is clearly visible on the hourly timeframe, which has continued in recent days. However, the downward trend line may be surpassed in the coming hours. The bulls, however, will have to sweat, as there are also two important lines of the Ichimoku Senkou Span B (1.3896) and Kijun-sen (1.3906) indicator on their way. However, overcoming these lines and trend lines will significantly increase the pair's chances of continuing the upward movement. No major events in the UK on Wednesday. However, the results of the Federal Reserve meeting will be announced in the evening, this also includes the US central bank's forecast, as well as Fed Chairman Jerome Powell's press conference. Until that time, the markets might also be quite active, as they often trade on expectations. In general, we continue to recommend trading from important levels and lines, when rebounding from them and surpassing them. As before, you should set the Stop Loss level at breakeven when the price passes 15-20 points in the right direction. The nearest level/line is always used as targets.
COT report
The GBP/USD pair fell by 100 points during the last reporting week (March 2-8). Despite the fact that the pound has been falling in the past two weeks, hardly anyone can now conclude that the upward trend is over. In principle, everything is clearly visible in the chart above. Moreover, just in the last 5-6 weeks, professional traders have been actively buying the pound. This is evidenced by the green line of the first indicator, which reflects the change in the net position of the group of non-commercial traders. At the same time, the Commercial group is increasing sales contracts. And this behavior of the two main groups of traders is the main sign of a strong trend. Thus, we see the strongest uncorrelation of the two main pairs. If the euro has been correcting for two and a half months, the pound has not. If the COT reports on the euro indicate a weakening of the bullish sentiment, then the COT reports on the pound - they say the opposite. Thus, the main thing now is not to try to assume that the pound and the euro will move in the same way, as is often the case. Unfortunately, there are no unambiguous factors as to why the euro and the pound are moving differently now. After all, if they do not correlate, this means that there are now global factors that have a strong impact on one or another currency in the eurozone or the UK. One negative is now coming from the UK, but the pound is growing much stronger than the euro. Could there be a problem in the eurozone? But we don't really receive much disappointing news from over there. Well, is it worth saying that the euro and the pound did not react in the same way to the growth factor in the yield of US Treasuries? Thus, in general, we believe that the COT reports for the pound unambiguously speak in favor of continuing the upward movement.
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