GBP/USD 5M
The GBP/USD pair traded as calmly as possible on Monday, however, there were still a couple of movements during the day. The price spent the whole day between the levels of 1.3845 and 1.3894. That is, the volatility of the pound/dollar pair was around 50 points at one point, which is very small. Also, the movement itself during the day looked flat, and there were no macroeconomic statistics and fundamental events either in the UK or in the States. However, several trading signals were generated during the day, which had to be worked out by traders. And it was even possible to make a profit on them. Let's take a look at how you should have traded on Monday. The first trading signal was formed at the beginning of the European session in the form of a rebound from the extremum level of 1.3886. After that, the price went down 25 points, which was enough to place a Stop Loss order at breakeven, but not to make a profit: the pair could not reach the nearest target level. Then there was an upward reversal and a return to the level of 1.3886. Thus, the first short position either closed at breakeven, or remained open, since the price did not clearly settle above the level of 1.3886. In any case, when the pair bounced off the 1.3886 level for the second or third time, traders should have been selling or opening new short positions. After that, the quotes of the pair dropped by about 25-30 points again. And this deal should have been manually closed in the late afternoon with exactly this level of profit. Let us remind you that we do not recommend rescheduling trades to the next day when trading on a 5-minute timeframe.
GBP/USD 1H
The pound/dollar pair dropped to the Senkou Span B line on the hourly timeframe, and before that it completed two upward trends at once. However, as we can see, the bears are currently not strong enough to systematically move the pound/dollar to the downside. Last Friday, this was helped by US reports, but traders had no important data to use on Monday, therefore the movement was as weak and non-trendy as possible. However, formally, there is still a downward trend, so a downward movement should be expected now. In technical terms, we continue to draw the attention of traders to the most important levels and recommend trading from them: 1.3754, 1.3800, 1.3886, 1.3981. Senkou Span B (1.3850) and Kijun-sen (1.3901) 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. There are no major fundamental or macroeconomic events scheduled in the UK and the US on Tuesday, August 10, so the pair may remain relatively weak.
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 70 points during the last reporting week (July 27 – August 2). The latest Commitment of Traders (COT) report for this week showed that the net position for the "non-commercial" group of traders slightly increased. To be more precise, it is for 7,000 contracts, which is not so little for the British currency. The main thing is different, the essence of the COT report coincided with what is happening on the market for the pound/dollar pair. If you look at the chart above, it becomes clear that there is no question of any downward trend now. That is, the net position of professional traders has only been declining in the last month and a half, and as a result, the number of short positions has become even more than long ones. However, this has not (yet) led to a change in the global trend to a downward one. Moreover, the net position of non-commercial traders has been declining more often over the past few months, but the British currency has only slightly adjusted against the global upward trend. At the moment, as in the case of the euro currency, it cannot be concluded that the global upward trend, which has lasted for a year and a half, is over. We still believe that the euro and the pound can resume growth at any time. As for the future prospects of the pair, they remain as vague as possible if we analyze only COT reports. Recall that when the green and red lines of the first indicator approach, it means the end of the trend. Now they are as close as possible, which gives reason to assume that the process of completing the upward trend is completed. But since the price is still very high, it should rather be concluded that the pair has simply corrected and is now ready to resume the upward movement.
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