GBP/USD 5M
The GBP/USD pair was trading in a very difficult manner on Wednesday again. In principle, there is nothing surprising in this, since the price has been in a frankly sideways channel 1.4100-1.4220 for more than three weeks. Therefore, all movements take place within this channel. And these are not ideal movements from the upper border to the lower one and vice versa. The pair is constantly changing the direction of movement, and it is very difficult to predict it even for several hours ahead. In addition, on Wednesday again there was not a single important fundamental or macroeconomic event. There is some news from the UK and the US, but it is unlikely to have a direct impact on the movement of the pair. Several signals were generated during the third trading day of the week. The price crossed the Senkou Span B line at the beginning of the European session, thus forming a buy signal. Subsequently, the price returned to this line three times, forming very fuzzy bounces. Traders could open long positions, but since the price could not go up after the formation of a signal even 20 points, the Stop Loss level was not set to breakeven. As a result, the trade was closed after the price settled back below the Senkou Span B line at a loss of 13 points. Further, the signals had to be very tightly filtered. Since a total of 4 signals were formed near the Senkou Span B line and all of them were false, it was no longer necessary to open a short position. The quotes dropped to the Kijun-sen line and seemed to have overcome it, but almost immediately turned upward and consolidated above the critical line. Therefore, if traders opened short positions to overcome the Kijun-sen, they received another 13 points of loss. After two deals were unprofitable in full flat conditions, it was no longer necessary to open new trading positions. In each article we say that the pair is flat. Today was the case when it was no longer necessary to work out every trading signal.
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GBP/USD 1H
The British pound continues to trade in the horizontal channel of 1.4100-1.4220 on the hourly timeframe and this can clearly be seen from miles away. The length of the horizontal channel is already so great that it does not even fully fit into the chart. For more than three weeks, the pair has been in absolute flat and cannot leave the side channel, only occasionally making attempts to break through its borders. Moreover, even bounces from the channel boundaries cannot be used as signals, since they are very fuzzy. In technical terms, we continue to draw the attention of traders to the most important levels and recommend trading from them: 1.4080, 1.4101, 1.400 and 1.4219. These levels have not changed for a long time, because the price continues to be in a limited range. Senkou Span B (1.4169) and Kijun-sen (1.4141) lines can also be sources of signals, but they are weak in the flat. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. On Thursday, traders may pay attention to the only important report for the pound/dollar pair - US inflation. Depending on what the actual value is, the pair can move up or down. However, we believe that there will be a reaction, so you need to be prepared for both sharp reversals and high volatility.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair increased by 55 points during the last reporting week (May 25-31). However, in general, no one doubts the direction of the current trend - upward. It was all the more surprising to watch the latest Commitment of Traders (COT) report, which showed that over the same time period, professional traders opened 500 buy contracts and 6,500 sell contracts. That is, the net position of the "non-commercial" group decreased by 6,000, which is a decent value for the pound. Thus, the picture is as follows. The pound continues to rise and cannot even really correct. At the same time, the size of the net position of the major players practically does not change. Since the beginning of March, changes in the net position have been insignificant, which is shown by both the first and second indicators. And in any case, these changes do not in any way reflect what is happening in the market itself. Moreover, the pound continues to show growth, simply not commensurate with the bullish sentiment of non-commercial traders. Anyway, any group of traders and all together. Thus, we continue to talk about such a global factor as the injection of trillions of dollars into the American economy, which, from our point of view, is the main reason for the strengthening of the British currency. Look, by the way, at the previous section of the trend, between October 2020 and March 2021. The pound gained 1400 points, while the net positions of commercial and non-commercial groups of traders remained practically unchanged. That is, large players did not increase their purchases at this time. At the same time, the pound showed an increase of 1400 points practically without a single pullback. As they say, the presence of third-party factors is obvious.
Explanations for the chart:
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