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GBP/USD 5M
The GBP/USD pair also moved very weakly on Wednesday. The markets showed the whole fuse a day earlier, when the pound fell by more than 110 points. But on Wednesday, the overall volatility of the day was about 40 points, which is just minuscule for the pound/dollar. Basically, on the 5-minute timeframe, you can clearly see that the pair spent most of the day in one place. It was between the 1.3747-1.3760 levels in the European trading session, that is, in the horizontal channel 13 points-wide, and in between the levels of 1.3755 and 1.3768 on the US one, that is, again in the 13 points-wide horizontal channel... The quotes try to show signs of life only by the end of the working day. However, not too convincing. By the way, the other day we wrote about why a flat is very dangerous. We said that with low volatility or in a flat, the price either rarely generates signals, or generates them in batches near any one level. This is exactly what happened today. The price traded around the level of 1.3754 for most of the day, breaking it ten times. However, it did not form a single sensible and strong signal. Unfortunately, for traders, a flat is not always obvious, especially when it comes to intraday flat, so it is quite possible that positions were opened on false signals. However, trades should not have been opened during the day. And the more time passed, the more obvious it became. By the way, early in the morning in the UK the inflation report was published (the number "1" in the chart). Quite unexpectedly, the consumer price index slowed down in July from 2.5% y/y to 2.0% y/y. Core inflation fell from 2.3% y/y to 1.8% y/y. However, as you can see in the chart, there was no market reaction to this report.
GBP/USD 1H
The pound/dollar pair has settled below the downward channel on the hourly timeframe, so we can assume that the downward trend continues at this time. When looking at the chart, one gets the impression that the movements in the pound/dollar pair are now quite strong, but in fact it is all about the scale of the chart itself. The movements even for the pound are now very weak. Over the past three weeks, the price has moved from a high to a low of only 250 points. It seems to be a lot, but we are talking about the maximum and minimum points. For most of this period, the price was in a much narrower range. Thus, the downward trend remains formally. In reality, it is very weak and can end at any time. In technical terms, we continue to draw the attention of traders to the most important levels and recommend trading from them: 1.3677, 1.3725, 1.3754, 1.3794, 1.3886. Senkou Span B (1.3873) and Kijun-sen (1.3802) lines can also be sources of signals. 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. On Thursday, 19 August, there will be nothing interesting in either the UK or the US. However, traders now do not really need macroeconomic statistics and any fundamental events. The pair fell on Tuesday, presumably due to the situation in Afghanistan, but on Wednesday traders ignored important reports, and today, when no events are planned at all, anything can happen. In general, now the pair is trading in the most confusing and illogical way.
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 40 points during the last reporting week (August 3-9). And, if big players continue to reduce their net position in the euro, then in the pound's case, professional traders started to buy the British currency again. Pay attention to the green line of the first indicator (net position of the "non-commercial" group) - it turned up and is growing. Thus, we might be witnessing an emerging new upward trend. However, major players were not particularly zealous in opening new contracts in the reporting week. To be more precise, they only closed them. The number of Buy-contracts (longs) for non-commercial traders decreased by almost 2,000, and 5,500 Sell-contracts (shorts). However, this still means that the net position has grown by 3,500, and the mood of the most important group of traders has become more bullish. Specifically "more bullish" and not "less bearish", because at this time the non-commercial group has more buy contracts that are open than that of sell (shorts) (43.7 thousand versus 37.6 thousand). This suggests that the bullish sentiment may indeed intensify in the coming months. Moreover, the technical picture for the pound is approximately the same as for the euro: quotes dropped to the low of the first round of correction against the upward trend and were unable to continue moving down. Therefore, the probability of a new round of the upward movement is high. As you can see, both Commitment of Traders (COT) reports and technical analysis predict approximately the same scenario. Consequently, we have the right to expect a return of the pound/dollar quotes to the level of 1.4240.
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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