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GBP/USD 5M
The GBP/USD pair also stopped trading in a normal way on Tuesday, May 4, which immediately caused a whole lot of problems with processing signals. Recall that the last two trading days were almost ideal in terms of signals and movement. But all good things come to an end. The harsh everyday life has come, when you need to earn profit, and not just open one deal in the morning, and "to take something of value out of something else" in the evening. Immediately, we note that the UK and the US did not release any important reports. Thus, the frequent changes in the direction of the pair's movement were not triggered by macroeconomics or foundation. Now let's try to figure out all the signals generated and understand whether it was possible to make money on them. The first signal was formed near the critical line - an ideal rebound and a sell signal. The price dropped to the Senkou Span B line and initially crossed it, so short positions should have been left open, but after 15 minutes the pair settled above this line, which served as a signal to close the short position and open long positions. The profit on the first trade was no more than five points. When the buy signal was being processed, the price returned to the Kijun-sen line and rebounded off it for the second time, making it possible to open new shorts and take profit worth eight more points using longs. After forming the second sell signal, the price could not immediately reach the nearest target and once again returned to the Kijun-sen line, from which it bounced once more. Thus, it was necessary to continue to stick with the short position here. The quote fell and the price crossed the Senkou Span B line, but, unfortunately, it could not reach the next extremum level of 1.3835. Thus, the short position had to be closed after the price settled above the Senkou Span B line at a profit of about 10 points. Closing above Senkou Span B is a new buy signal. The fourth and fifth rebounds from the Kijun-sen line are sell signals. We will not describe the identical movements of the pair between these lines. On these signals in the flat it was possible to earn another maximum of 10-12 points. Thus, just like with the euro, traders could have earned 30 points on Tuesday, which is an excellent result for an absolutely flat day.
GBP/USD 1H
A descending channel was formed on the hourly timeframe, however, it is more for a formality, since its slope is low and, so, it is practically horizontal. Therefore, it does not explain what is happening with the pound/dollar pair right now. In general, the swing mode is preserved, and practically on all timeframes. We believe that this week the pair can calmly resume its movement down another 200 points within the swing from the 4-hour timeframe. Thus, we continue to pay attention to the most important levels and lines: 1.3807, 1.3835, 1.3886 and 1.3975, as well as the Kijun-sen (1.3887), Senkou Span B (1.3860) lines. You are advised to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The nearest level/line should always be used as targets (exceptions - if the target is too close to the signal). No major events in the UK, while the US will release the ADP Private Sector Worker Change Report and the ISM Service Sector PMI. However, this does not really matter for the pair now, since its movements are practically unpredictable in any case.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 90 points during the last reporting week (April 20-26). The last few Commitment of Traders (COT) reports have shown that the mood among professional players is becoming more bullish again, but in general they themselves do not know what to do with the pound in the past year. Look at the first indicator in the chart. The green line is the net position of the non-commercial group of traders. It constantly changes the direction of movement, intersects with the red line (net position of the commercial group). In general, it is now impossible to predict the pair's succeeding movement based on COT reports. The pound rose in value against the dollar from October to March, although the green and red lines showed no trend at that time.
Major players closed 1,100 buy contracts (longs) and got rid of 5,000 sell contracts (shorts). Thus, their net position increased by 3,900 contracts, and the mood became more bullish again. In general, it also remains bullish, since the total number of buy contracts from professional players exceeds the total number of sell contracts twice. And so, of course, we can expect the pound to rise further, but we still believe that the swing will continue at this time. Too many conflicting factors are at the disposal of the markets. Constant changes in the direction of movement of the green line indicate that big players do not know what to do with the pound in the long term.
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.
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