GBP/USD 5M
The GBP/USD pair was trading very actively on Thursday. The results of the Bank of England meeting were to be summed up on this day. And although the markets did not expect any important decisions from the British central bank, we could assume that the markets would receive some information. However, the BoE did disappoint. It did not make any decisions, nor did it speak about negative rates and only noted that GDP is likely to decline in the first quarter of 2021. However, this was understandable even without the BoE. The pound began to fall even before the official announcement of the results, but first things first. The European trading session found the price in an upward movement, on the way to the extreme level of 1.3998. Thus, a rebound from this level was the first signal of the day to sell. Since the nearest target from below was the extremum level of 1.3946, traders could have earned about 40 points of profit in the morning. This was followed by a rebound from the 1.3946 level, which should be interpreted as a buy signal. There were actually two rebounds, but in any case, the pound/dollar pair went up enough to, at least, close long positions at breakeven, since the goal was not formally achieved. Surpassing the 1.3946 level can be considered as the next signal. It was at this time that information from the BoE began to flow, which had little impact. After overcoming 1.3946, quotes continued to drop without question and the nearest target was reached - the Kijun-sen line, which could bring traders another 30 points of profit. But the rebound from the Kijun-sen line could and should have been practiced, especially since it was eloquent. The price started an upward movement within the day and again reached the nearest target - the Kijun-sen line, bringing traders about 30 more points of profit. Therefore, it was possible to earn 100 points during the day, and the results of the BoE meeting and Federal Reserve Chairman Jerome Powell's speech had practically no effect on the mood of traders.
GBP/USD 1H
Levels 1.3998 and 1.3946, as well as the Kijun-sen lines were clearly reached on the hourly timeframe. In general, there is no upward or downward trend at the moment. There is no trend line or trend channel. Therefore, we state a flat or sideways movement, approximately between 1.3800 and 1.4000. There are no major macroeconomic reports or other events scheduled in the UK and the United States on Friday. Therefore, on the one hand, there may be a sluggish movement during the day or an outright flat, on the other hand, the technical picture will not be influenced by the foundation and macroeconomics. In general, we continue to recommend trading from important levels and lines, when rebounding from them and overcoming 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