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GBP/USD 5M
The GBP/USD pair traded quite nicely on Tuesday, and several signals were generated. In general, the upward trend for the pair persists, while the quotes continue to be inside the horizontal channel with a width of approximately 120 points. However, movements within this channel can also be worked out on lower timeframes. Moreover, the euro/dollar pair has also been in the most flat-like range in recent weeks. Let's start to deal with the trades. The first signal was formed at the beginning of the European trading session. A rebound from the extremum level of 1.4219 made it possible for traders to open long positions, but there was no need to rush, since the resistance level of 1.4239 was located a little higher, and at the same time there was another extremum level of 1.4240. There was a possibility of a rebound, and in the end that was exactly what happened. There was also no need to rush to sell on the second signal in the form of a rebound from 1.4240, since now the extremum level 1.4219 was located below the level and there could also be a rebound from it. But when the price went beyond the level of 1.4219 and formed the third signal of the day - to sell - it was necessary to open short positions with the Kijun-sen line as the target. A little later than this signal, the UK manufacturing PMI was published (figure "1" in the chart), which slightly decreased in May, but it did not have a particular impact on the pair's movement. Subsequently, the quotes of the pair dropped to the critical line, from which a rebound followed. Therefore, 54 points could be earned on a short position. A buy signal was immediately formed in the form of a rebound from the Kijun-sen line. It could be worked out, since it was only the beginning of the US session, and the US reports and the speech of Bank of England Chairman Andrew Bailey, were scheduled for a later time. However, there was no strong upward movement, and before the ISM index was released (number "3" in the chart), a long position could be manually closed so as not to risk it. In the end, this trade could have brought in another 10 points or so. We do not consider the subsequent signals, since they were formed too late.
Overview of the EUR/USD pair. 2 June. Nothing changes in the balance of power between the euro and the US dollar
Overview of the GBP/USD pair. 2 June. Is the UK on the verge of a third wave of COVID?
GBP/USD 1H
The British pound has reached the level of 1.4240 on the hourly timeframe, which is the pair's 3-year high. However, the bulls failed to go beyond it the first time, followed by a rebound and a pullback by 90 points. In general, the pair continues to "swing" in the horizontal channel of 1.4100-1.4220. The price spends most of its time in this range. Remember that the price can move absolutely randomly within the flat. The pound continues to remain in close proximity to its 3-year highs, so today it may resume its movement towards it and could try to surpass. The pair will not trade along them forever. We continue to draw your attention to the most important levels, of which there are very few now, and trade from them: 1.4080, 1.4101, 1.4219 and 1.4240. Senkou Span B (1.4118) and Kijun-sen (1.4169) lines can also be sources of signals, but they are very weak in a flat. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. There are no major events or publications scheduled for Wednesday in the UK and the United States. Thus, traders will have to make decisions based solely on technique.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair increased by 10 points during the last reporting week (May 18-24). However, in general, the pound continues to rise in price, which is clearly visible on any long-term timeframe. Major market players continue to generally increase long positions, which provides an additional incentive to the British currency. The group of "non-commercial" traders (the most important group) opened only 936 Buy contracts (longs), but at the same time closed 4,700 Sell contracts (shorts) in the reporting week. And so the net position increased again, by more than 5,000 contracts, which means much more for the pound than for the euro. The mood of professional traders has again become a little more bullish, but in the medium term, it is absolutely impossible to say that large players are constantly increasing longs or closing shorts. The second indicator in the chart above, which shows the change in the net position for a group of "non-commercial" traders, shows that big players started to actively built up longs around February, but by mid-March their number began to decline, and has been approximately at the same level since the beginning of April. Thus, the pound continues to rise in price completely out of proportion to the bullish mood of non-commercial traders. Therefore, we continue to believe that the pair is much more influenced by the fact that hundreds of billions and trillions of dollars are infused into the US economy than the actions of major market players. However, most likely, the effect of these two factors is multiplied by each other, which leads to an even stronger result. In our case, the pound continues to grow when it should have fallen to the 30 figure, if the fundamental background from the UK was even slightly taken into account.
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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