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GBP/USD 5M
The GBP/USD pair moved according to its own rules on July 22. If the euro/dollar pair had an important factor of influence in the form of the European Central Bank meeting, then the pound/dollar pair did not have such a factor. Therefore, the pound was trading more calmly and with an upward trend. We have already said that the decline in the pound's quotes at the beginning of the week was not absolutely logical and reasonable. Therefore, the current upward movement is logical: it seems to level out the unfair losses of the pound earlier. From macroeconomic reports on Thursday, only the report on applications for unemployment benefits in the United States can be distinguished. Although the number of applications turned out to be significantly higher than the analysts expected, there was no particular market reaction to this report. Thus, the whole day the pair was trading on a pure technique. Let's take a look at the chart and analyze how you should have traded yesterday. In principle, the pair reached all important levels and lines very well during the day. At first, the price formed not the strongest signal near the critical line, after which it immediately crossed the extremum level of 1.3731 and rebounded from the level of 1.3754. Therefore, you could earn about 18 points on a long position and immediately open a short position. Further, the price, not without incident, dropped back to the Kijun-sen line, from which it bounced. However, this rebound turned out to be very tense and at the time of its identification, the price had already gone up far. Therefore, the profit on the short position was only a couple of points. Nevertheless, a rebound from the critical line is also a signal to buy and it should also be worked out. This time the price managed to overcome the level of 1.3754, but could not reach the next target level of 1.3800. Therefore, the long position should be closed when the quotes settle below the level of 1.3754. The profit on this deal was also literally a few points. Thus, in total, it was possible to earn about 20 points over the past day according to our advice.
Overview of the EUR/USD pair. July 23. Christine Lagarde's rhetoric and the ECB's sentiment remained ultra-soft.
Overview of the GBP/USD pair. July 23. The fourth "wave" of the pandemic in Great Britain continues unabated. A new political crisis is brewing in the country.
GBP/USD 1H
The pound/dollar pair continued its upward movement on the hourly timeframe for most of the past day. However, by their end, a downward rollback began, which can turn out to be no less rapid than the growth that preceded it. However, we continue to consider the variant with a new upward trend as the main one. Therefore, after the rollback, we expect the resumption of the upward movement with the final target near the level of 1.4240. Unfortunately, at the moment, there is still no trend line or channel that could help in understanding the current trend. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3677, 1.3731, 1.3754, 1.3800, 1.3859. Senkou Span B (1.3825) and Kijun-sen (1.3714) lines can also be signal sources. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. Macroeconomic reports in the UK will finally be released on Friday. True, it is not a fact that traders need it, since the pound is traded very actively even without it. Nonetheless, June retail sales and service and manufacturing PMIs for July are due in the morning. In the United States, business activity indices will also be published in the late afternoon. We believe that the impact on pairs will be minimal from these reports.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair rose by 35 points during the last reporting week (July 6-12). However, this is not a price change that can be considered significant. During the reporting week, the group of traders "non-commercial" opened only 1,700 sell contracts (shorts), but at the same time it closed 8,000 buy contracts (longs). Thus, the net position of professionals has decreased by almost 10,000 contracts. Considering that only around 100,000 contracts were opened for the major players before last week, then 10,000 is a serious change in the mood of professional players. Thus, the mood of non-commercial traders has become much less bullish than before, and is already approaching the concept of neutral, as they have 43,000 buy contracts and 36,600 sell contracts left open. Almost complete equality. Based on this, we can assume that the pound may continue to fall. From our point of view, the pound currently has more chances for a further fall than the euro. This is supported by the difficult epidemiological situation in the UK, as well as a stronger decline in the net position. However, one should not write off the fact that the Federal Reserve and the US Treasury are injecting trillions of dollars into the American economy. This factor can still strongly influence the demand and supply of the US currency in the foreign exchange market. Consequently, we still expect that the pound/dollar pair may drop to the 1.3600-1.3666 area, but we do not consider the option with a further fall.
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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