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GBP/USD – 1H.
According to the hourly chart, the quotes of the GBP/USD pair also performed a reversal in favor of the US dollar and consolidated under the corrective level of 100.0% (1.3006) and the ascending trend line, as well as falling to the Fibo level of 76.4% (1.2928). Thus, the process of falling quotes can be continued in the direction of the next corrective levels of 61.8% (1.2879) and 50.0% (1.2840). For the British, meanwhile, the number one topic remains Brexit and everything related to it. The next "X hour" for the pound is slowly approaching, as a new EU summit starts tomorrow, which will be partly devoted to resolving issues on Brexit, on the trade agreement between the UK and the EU. Thus, although the parties agreed to extend the negotiations for another month, that is, until November 15, it is still unclear why this is necessary if there is no progress in the negotiations themselves. However, we will not "run ahead of the engine". Tomorrow or the day after tomorrow, we will receive new information, and we will be able to draw new conclusions on this topic. So far, everything looks the same. London and Brussels can not agree, Boris Johnson says that he is not afraid of leaving the EU without an agreement and he is not against trading with the European Union under WTO rules. For the British pound, this kind of information is pessimistic. However, for example, yesterday's drop in the British dollar is not related to Brexit and negotiations.
GBP/USD – 4H.
On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the US currency and began to fall towards the corrective level of 50.0% (1.2867). The rebound of quotes from this level will allow traders to count on a reversal in favor of the British currency and the resumption of growth in the direction of the Fibo level of 23.6% (1.3191). Also today, a bullish divergence is brewing in the CCI indicator, the formation of which may coincide with a rebound from the level of 50.0%, which will further increase the probability of further growth.
GBP/USD – Daily.
On the daily chart, the pair's quotes performed a reversal near the corrective level of 76.4% (1.3016) in favor of the US currency and began the process of falling in the direction of the corrective level of 61.8% (1.2709).
GBP/USD – Weekly.
On the weekly chart, the pound/dollar pair closed under the lower downward trend line, thus, a false breakout of this line followed earlier. The pair returns to a downward trend.
Overview of fundamentals:
On Tuesday, the UK released reports on the unemployment rate, applications for unemployment benefits, and changes in average wages in the UK. The first report showed an increase of up to 4.5%, the second - 28 thousand applications, the third - an increase of 0% (including bonuses). However, the fall of the British pound occurred after lunch, and the reports were released in the morning, so they were not the reason for the fall in the pair's quotes.
The economic calendar for the US and the UK:
On October 14, the US and UK news calendars do not contain anything interesting. Thus, the information background will not be available today.
COT (Commitments of Traders) report:
The latest COT report on the British pound that was released last Friday showed that there were no changes as such during the reporting week. The "Non-commercial" category of traders opened only a thousand long contracts and closed 435 short contracts. Thus, the changes are minimal and do not allow us to draw any long-term conclusions. In total, speculators continue to hold a larger number of short contracts, which indicates their belief in the fall of the British dollar. And it is in the last two weeks that the number of these contracts has grown significantly. In general, the market is in almost perfect balance. The COT report shows that a total of 164,622 long contracts and 164,137 short contracts are open.
Forecast for GBP/USD and recommendations for traders:
Today I recommend buying the GBP/USD pair with a target of 1.3010 if the rebound from the corrective level of 50.0% (1.2867) is made on the 4-hour chart. I recommend selling the British dollar with targets of 1.2879 and 1.2840, as the closing was made under the ascending trend line on the hourly chart.
Terms:
"Non-commercial" - large market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but for current activities or export-import operations.
"Non-reportable positions" - small traders who do not have a significant impact on the price.
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