21.05.202603:30 Forex Analysis & Reviews: Intraday Analysis of GBP/USD on May 21. ICT Trading System. Hope Dies Last

GBP/USD 5M Analysis

The GBP/USD currency pair traded for most of the day on Wednesday, with minimal volatility and no clear direction. However, in the evening, Donald Trump once again announced that negotiations with Iran were going very well, though he did not specify who was conducting them. Recall that earlier it was reported that the UAE, Qatar, and Saudi Arabia had joined the negotiation process. The market reacted once again to hope, which, as we know, dies last. On the other hand, the report on British inflation, which slowed to 2.8% in April, was ignored by the market, disregarding the Middle Eastern conflict and high oil and fuel prices. We had warned that the factor of declining inflation in the UK might have already been priced in last week, when the pound objectively showed a significant decline. However, it seems the market simply chose to ignore the macroeconomic backdrop once again.

From a technical standpoint, there is no question about the downward trend on the hourly timeframe. However, this trend could end soon if the pair breaks above the Senkou Span B line. Geopolitics has once again provoked market volatility, but its nature often changes. Therefore, after the strong decline in the British currency last week, a substantial rise has occurred this week—and today, it may be followed by a new drop.

On the 5-minute timeframe on Wednesday, several good trading signals were formed. During the European trading session, the pair bounced twice from the area of 1.3369-1.3377; however, without news from Trump, the pound was unlikely to expect such a strong rise. Nonetheless, traders had a good opportunity to open long positions. In the American session, another opportunity arose when the price surpassed the critical line.

GBP/USD 4H Analysis

On the 4-hour timeframe, the British pound is also within a downward trend following the breakdown of the upward structure last week. The price has literally plummeted 300 pips, with the CHoCH line currently at 1.3653, and it has not been able to be shifted lower for now. Throughout last week's decline, several "bearish" FVGs can be identified, but we are focusing only on the most recent one. On Tuesday, the price completely filled this pattern and reacted to it. However, the reaction was very weak, the decline was short-lived, and Donald Trump triggered a new rise in the pair on Wednesday. The "bullish" FVG in the area of 1.3318-1.3345 was not worked out on Wednesday.

GBP/USD 1H Analysis

On the hourly timeframe, the GBP/USD pair is attempting to start a new upward trend, aided by Trump. More specifically, by unverified information that the market could not ignore once again. The macroeconomic and fundamental backdrop continues to have little impact on the pair's movements, while geopolitics regularly provokes swings in either direction. We do not believe that without a real escalation in the Middle East, the dollar will continue to strengthen. Positive news from the White House came in on Monday, and the dollar immediately fell by 100 pips. The story repeated itself on Wednesday.

For May 21, we highlight the following key levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3477) and the Kijun-sen line (1.3414) may also serve as sources of signals. It is recommended to set the stop-loss order to breakeven once the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator may shift throughout the day, which should be taken into account when determining trading signals.

On Thursday, indices of business activity in the service and manufacturing sectors for May are scheduled for release in the UK and the U.S., but we believe the market will pay no attention to this data either. It is worth reminding that important reports on unemployment and inflation were ignored earlier this week.

Trading Recommendations:

Today, traders may open short positions targeting 1.3369-1.3377 on the price bounce from the area of 1.3465-1.3480. Long positions can be opened if the price consolidates above the 1.3465-1.3480 area, with a target of 1.3588. On the 4-hour timeframe, we should expect new patterns to form.

Explanations for the Illustrations:

• Price levels of support and resistance – thick red lines where the movement may end. These do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred from the 4-hour to the hourly timeframe. These are strong lines.
• Extremum levels – thin red lines where the price previously bounced. These serve as sources of trading signals.
• Yellow lines – trendlines, trend channels, and any other technical patterns.
• CHOCH – change of trend structure.
• Liquidity – Stop Loss, pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. Price moves very quickly through these areas, indicating a complete absence of one side in the market. Subsequently, the price tends to return and react to such areas in continuation of the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react to it; it breaks impulsively and then tests it from the other side.
• OB – Order Block. The candle on which a market maker opened a position with the aim of gathering liquidity to form their position in the opposite direction.