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GBP/USD 5M
The GBP/USD pair was trading with a decrease in the morning, and then it rose in the afternoon. Thus, in general, we can say that the penultimate trading day of the week was flat. In principle, the same situation was observed for the euro/dollar. However, the pound/dollar pair maintains an upward trend, which is supported by the trend line. It is perfectly visible in the chart of the hourly timeframe. Thus, the pound as a whole continues to rise in price against the dollar, but very soon this process may be completed. On the eve of the New Year, the British currency really showed a very good growth of 300 points and adjusted well. But the downward trend remains on the higher TF, so the current upward movement is still considered as a correction. At the same time, we have already said in fundamental articles that the entire downward movement of recent months is also a correction against the upward trend of 2020. Therefore, the pound's growth may develop if the fundamental background supports bulls in the next few months. Now let's deal with trading signals. There weren't many of them. A buy signal could have been formed at the European trading session, but the price did not reach the critical line of 6-7 points. This is too big a margin of error to ignore. But two sell signals were formed near the level of 1.3513. For the first time, the price went down about 30 points, but failed to reach the nearest target and returned to 1.3513. Thus, the first short position closed at zero by Stop Loss. The second transaction brought literally 10 points of profit, since it should have been closed manually in the late afternoon. For the second time, the pair also failed to reach the nearest target. No important reports published on Thursday. Volatility remained not too high - 68 points.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair once again adjusted to the ascending trend line, but this time bounced off the critical line. However, the price could not escape above the extreme level of 1.3513, so a new round of corrective movement to the trend line may begin today. If the bears manage to settle below it, then the round of correction may develop into a downward trend. At the moment, it is clearly visible that the upward movement is weakening. However, it is better to draw conclusions after the New Year. We highlight the following important levels on December 31: 1.3362, 1.3513, 1.3570. The Senkou Span B (1.3302) and Kijun-sen (1.3455) lines can also be signal sources. Signals can be "rebounds" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when searching for trading signals. No important publications and events planned in the UK and the United States on December 31. However, the pound has not needed them lately to show a rather volatile movement and trend.
We recommend you to familiarize yourself:
Overview of the EUR/USD pair. December 31. Traders started preparing for the New Year back in November.
Overview of the GBP/USD pair. December 31. The pound is waiting for another fun year.
Forecast and trading signals for EUR/USD for December 31. Detailed analysis of the movement of the pair and trade deals.
COT report
The mood of commercial traders was much more bearish during the last reporting week (December 7-13). Commercial traders closed 6,700 sell contracts (shorts) and 20,100 buy contracts (longs) during the week. Thus, the net position for the "non-commercial" group of traders decreased by 13,400 contracts, which is a lot for the pound. Thus, unlike the euro currency, the pound, according to COT reports, continues to fall quite reasonably: major players continue to sell it. However, the green and red lines of the first indicator (which mean the net positions of the non-commercial and commercial groups) have already moved far away from each other. Recall that such a deletion signals the imminent end of the trend. However, as with any fundamental assumptions, specific technical signals are required to work out this hypothesis, which are not currently available. If we do not take into account the increase in the key rate by the Bank of England, then there are no special fundamental reasons for the growth of the pound now either. Recall that Prime Minister Boris Johnson continues to get into various scandals in Great Britain and there is already talk that he will leave his post before the end of the deadline. The pandemic in the UK is gaining momentum and the other day an anti-record was set for the daily number of infections. Omicron is also spreading quite rapidly across the country, creating additional risks for the healthcare system and the economy. London, on the other hand, cannot find a common language with Paris and Brussels, which threatens it with the deterioration of relations with its closest neighbors and the loss of markets for the sale of products. But there is no positive news.
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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