The GBP/USD pair also started a weak correction on Tuesday after buyers failed to overcome the first resistance level of 1.2889. However, the pair's quotes resumed their upward movement and broke the 1.2889 level in the afternoon. Thus, the US dollar did not even manage to adjust normally on July 28. Accordingly, the upward trend continues, bears are still absent from the market, and the trend line continues to support traders to grow. Therefore, we should not wait for the dollar to strengthen before the bears manage to overcome the trend line and, preferably, the Kijun-sen line.
Both linear regression channels are still directed upwards on the 15-minute timeframe, so there are no prerequisites for changing the trend's direction at the moment. The latest Commitments of Traders (COT) report on the British currency alerted market participants. The pound sterling grew against the US dollar during the reporting week (from July 15 to 21), but the most important category of traders "non-commercial" opened more Sell-contracts than Buy ones at this time. Non-commercial traders opened 4,500 new Sell-contracts and 3,000 Buy-contracts in just a week. Thus, the net position has decreased by around 1,500, which means that the bearish mood among professional traders has increased. The commercial category of traders also did not open Buy-contracts, but on the contrary, got rid of them, closing almost 5,000. Thus, both groups of traders did not increase their longs, however, the pound was getting more expensive and continues to get more expensive to this day. We believe that this is a signal for an incipient change in the trend, but this does not mean that the upward trend will end tomorrow. However, it is quite strange to see the growth of the currency, which is mostly sold off by major players.
The fundamental background for the GBP/USD pair slightly improved on Tuesday, although market participants did not really need it. The pound has already been bought rather zealously in recent weeks and without fundamental support. Nevertheless, purchases continued after information emerged from Michel Barnier, who said that an agreement with London was still achievable and that he saw British Prime Minister Boris Johnson's desire to conclude a deal in a personal meeting. Thus, Barnier and his team are ready to continue working on the deal, despite the fact that Johnson's position named after US President Donald Trump is already clear to everyone. That is, London wants the kind of deal it wants, and is not ready to give in on this issue. If Brussels also does not yield, then London is ready to sever all ties and agreements with it and trade according to the World Trade Organization rules, even though this will be to its detriment. In any case, by the end of the summer the situation with the negotiations should finally become clear, since Johnson personally planned to visit Brussels, and he promised to curtail any negotiations by the end of the summer if progress is not made. In general, as usual, there are many high-profile statements, but few concrete actions. But the bulls are ignoring all this data for now and continue to cheerfully buy the pair, which leads to a strong increase in the pound and a strong fall in the dollar.
There are two main scenarios as of July 29:
1) The outlook for the bulls continues to be very positive, as the pair's quotes continue to remain above the trend line. The first target for this week was broken yesterday – the resistance level of 1.2889. Thus, you are advised to keep long positions open with the targets of the resistance levels 1.2988 and 1.3174. Potential Take Profit in this case will be from 40 to 220 points.
2) Sellers are advised to start considering the possibility of opening short positions with the goal of the Senkou Span B line (1.2622), but to do this, you need to wait until the Kijun-sen line (1.2809) has been overcome and, accordingly, the upward trend line. The potential Take Profit in this case is about 150 points.
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