GBP/USD 5M
The GBP/USD pair moved a little more actively than the EUR/USD pair. However, it was still trading in very limited ranges for most of the day. For example, it was between 1.3720 and 1.3740 for most of the European trading session, and was between 1.3745 and 1.3761 for most of the US session. Thus, movements were observed only at the beginning of the European session and at the beginning of the US one. Also, traders did not pay any attention to the PMIs and the report on retail sales in the UK (marked in the chart with the numbers "1" and "2"). Although business activity in the services and manufacturing sectors significantly fell in July. Likewise, the data on US PMIs were ignored. Thus, it is generally difficult to understand what the markets were guided by when making trading decisions on Friday, if the intraday trend was replaced by a flat twice. Now let's look at the trading signals that were generated on Friday. By and large, there were only a few of them. The first - a signal to sell in the form of a breakthrough of the extremum level of 1.3754 - was not bad in terms of strength, but the price managed to only get near 1.3731, where the downward movement ended. At the same time, there was no rebound or breakthrough from the level of 1.3731. Thus, the sell signal should have been worked out with a short position, but should not have opened a long position near the level of 1.3731. The profit on the first signal was about 12 points. The third signal - to buy - was formed at the beginning of the US session. The price crossed the level of 1.3754 from the bottom up, but could not continue to move up and returned to the level of 1.3754, which was near where it was until the market closed. Thus, traders could have received about 4-5 points of loss on this trade. It should have been manually closed in the late afternoon.
GBP/USD 1H
The pound/dollar pair stopped rising on the hourly timeframe last Friday, but at the same time did not really begin to correct. It is still difficult to say what exactly provoked a rather strong downward movement, and then an equally strong upward movement. Nevertheless, at this time the pair is practically in the same place as a week ago. Thus, the price is now at a certain equilibrium point. The markets ignored all the macroeconomic reports of the past week (of which there were few). In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3677, 1.3723, 1.3754, 1.3800, 1.3859. Senkou Span B (1.3740) and Kijun-sen (1.3678) lines can also be sources of signals. 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. No major reports will be released on Monday in the UK. Thus, traders will be able to pay attention only to the report on orders for durable goods in the United States. You will have to trade practically on pure technique during the day, but at the same time the pound/dollar pair can continue to move quite briskly.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 200 points during the last reporting week (July 13-19). The data from the latest Commitment of Traders (COT) reports fully support this development: the net position of non-commercial traders is falling, and the pound is also dropping. Thus, everything seems to be logical. However, the first indicator in the chart clearly shows that the upward trend is not ending, but that a new downward trend is about to begin. The green and red lines crossed, which already means a bearish mood of traders. Let us remind you that the green line is the net position of the "non-commercial" group, and the red line is the net position of the "commercial" group. Consequently, at this time, professional players have already opened a larger number of contracts for selling (short) than for buying (longs). And this suggests that major players believe in the further fall of the British currency. But here the same factor also works as for the euro/dollar pair. Trillions of dollars continue to flow into the American economy, which is why its rapid recovery is achieved. However, at the same time, the money supply is growing, inflation is rising, which depreciates the dollar much faster than the sales of the major players of the pound. Consequently, we are fully justified in expecting that the pound will also start to rise in price again, simply because inflating money supply in the United States is more global. During the reporting week, major players immediately opened 11,600 contracts for sale and closed 1,100 contracts for buy. Their net position decreased immediately by 12.7 thousand. Now they already have more open sell positions than buy ones. However, on all these actions of large players, the pound barely managed to get to the last local low, which was formed even when the mood of traders was bullish.
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