GBP/USD 5M
The GBP/USD pair moved a little more actively than usual on September 7. In fact, the pair moved only 90 points during the day. This is quite a lot, but in the chart it looks as if the pair fell by 200. Recall that the usual, normal volatility value for the pound/dollar pair is 100-130 points. Thus, yesterday's "strong" movement is in fact weaker than the movements at normal times. Nevertheless, the movement was still there and let's figure out how to work it out. First of all, it should be noted that the decline in the British currency was presumably caused by the speech of Michael Saunders, who hinted that the Bank of England may extend the QE program, which in the future will cause an even greater increase in inflation and make it difficult for the regulator to normalize monetary policy. In the chart, the beginning of Saunders' speech is marked with the number "1". As you can see, the time when the quotes began to fall and Saunders' speech coincide. But trading signals began to form much later. At first, the quotes of the pair dropped to the critical line, however, it was not possible to form a strong and clear signal for a rebound near this line. For a couple of hours, the quotes went along this line, after which they settled below it, which could already be regarded as a signal to sell and open short positions here. Then the pair dropped to the support area 1.3794 - 1.3785 and overcame it. Therefore, short positions should have been kept open. Unfortunately, the pair failed to reach the next target and returned to the level of 1.3785, and then to the level of 1.3794. Therefore, in this area, a short position could be manually closed in a profit of about 10 points.
Overview of the EUR/USD pair. September 8. The funeral of the European currency: the euro/dollar has stopped moving
Overview of the GBP/USD pair. September 8. Bank of England member Michael Saunders collapsed the pound sterling.
GBP/USD 1H
The GBP/USD pair not only dropped to the critical line, but also crossed it and the lower border of the channel on the hourly timeframe. Thus, as in the case of the euro, the trend has changed to a downward one and now we expect at least a slight decline in the pair's quotes. The closest target is the Senkou Span B line. We also continue to draw traders' attention to the most important levels: 1.3677, 1.3747, 1.3785 - 1.3794, 1.3886, 1.3948. Senkou Span B (1.3704) and Kijun-sen (1.3810) lines can also be signal sources. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. No important events planned in the United States on Wednesday, September 8, except for the publication of the "Beige book" review, which can only be called important at a stretch. On the other hand, the UK will host a special Treasury committee hearing, during which the Bank of England Governor Andrew Bailey will report on the work done. Potentially, in the course of this speech, a fairly large amount of important information may sound, therefore, the reaction of the markets can be very strong. In general, when Bailey speaks, you should be as careful and attentive as possible.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair gained 35 points during the last reporting week (August 24-30). The most important group of non-commercial traders continues to reduce their net position, and their mood is becoming increasingly bearish. These changes are clearly visible on the indicators in the chart above. The first indicator clearly shows that the green line (net position of the "non-commercial" group) has already gone below the zero level. Simply put, the mood of the major players turned bearish at this point. You can also see that in the last six months the red and green lines (net positions of the "commercial" and "non-commercial" groups) only moved towards each other, which means the end of the current trend (in our case, an upward trend). However, in fact, we still cannot conclude that the upward trend is over, due to too weak a correction against this trend. It is the weakness of the correction over the past six months that does not allow us to conclude that this is the beginning of a new trend, and not just a correction. Thus, major players continue to sell off the pound, while the currency itself could not even go below the target area of 1.3600-1.3666 after three attempts. Therefore, we believe that in the first place in terms of importance remains the factor of infusion of hundreds of billions of dollars into the US economy by the Fed, which ensures the dollar's depreciation in the long run and does not allow it to strengthen too much in the short term. Non-commercial traders closed 2,500 buy contracts (longs) and almost 5,000 sell contracts (shorts) during the reporting week. Thus, the net position even slightly increased, but this does not change the essence of the matter. So far, the major players are bearish, but this does not help the pound/dollar pair to continue moving below 1.3600.
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