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Analysis of GBP/USD 24-hour TF.
The GBP/USD currency pair continues to trade rather confusingly. Look at the illustration above. The current downward movement, which has been going on for 7 months, also does not look like a downward trend, as does the movement of the euro/dollar pair. Therefore, it can be assumed that both pairs continue to adjust. If so, the correction will end sooner or later. If so, then it may end in the near future, as it has been going on for quite a long time. It should also be noted that during all these 7 months, the pair has never managed to gain a foothold above the Ichimoku cloud, although the corrections against the correction are very strong and frequent, which once again confirms the correctional nature of the entire movement. There have been many important events for the British currency this week. In particular, the same Fed meeting, after which the pound began to fall. However, much more important was the meeting of the Bank of England, the results of which were supposed to provoke an increase in the pound by 200 points. But instead, we saw a drop of almost 300. The thing is that in just a few days, several global analytical and news agencies have stated that they believe in a rate hike already at this meeting. Based on what such conclusions were made, if BA has not even reached the curtailment of QE, it is unknown. However, on the day of the announcement of the results of the meeting, the markets did not wait for any rate increase, so a wave of sales of the British currency followed. As a result, the quotes dropped to the support level of 1.3641 and almost reached their previous low. If a rebound from these levels happens, it will be a very good reason to start forming a new upward trend. Moreover, the technical picture for the euro/dollar is also very similar to the end of the downward movement.
Analysis of the COT report.
During the last reporting week (October 25-29), the mood of professional traders practically did not change. However, it should be noted that the two most important days of last week ( Wednesday and Thursday, when all the strongest movements occurred) were not included in the latest report. In a week, we will be able to see how much and in which direction the mood of professional traders has changed. In the meantime, we can only draw the same conclusions as a week ago. The green and red lines of the first indicator continue to constantly change the direction of movement, constantly intersect. This suggests that the big players themselves do not understand what to do with the pound. However, this can be seen from the very schedule of the pair's movement, starting from July. For all these 4 months, the pound/dollar pair has been between the levels of 1.3400 and 1.4000. It was during this period that commercial and non-commercial traders changed their mood almost every week. Thus, taking into account the previous changes, we would assume that new growth of the British currency will begin in the near future with the prospect of a 500-point rise. Moreover, the results of the Bank of England meeting were not "dovish". The British currency has fallen undeservedly, which means that the markets may soon recoup this injustice. It should also be noted that during the reporting week, professional traders opened 5.8 thousand contracts for purchase and 7.5 thousand contracts for sale. Thus, the net position has not changed much.
Analysis of fundamental events.
This week, in addition to the above events, there were also several important publications. However, they were all ignored. In particular, quite important indices of business activity in the US ISM services and manufacturing sectors. But this is not surprising, since the markets from the very beginning of the week were focused on two meetings of central banks, as well as on Friday Nonfarm. As we have already said, such a strong fall in the pound looks unfair, given that two members of the monetary committee voted to raise the key rate, and three voted to curtail the quantitative stimulus program. Consequently, the mood of the Central Bank has become much more "hawkish". Consequently, the pound should have shown growth. Friday's Nonfarm after all no longer had any meaning for traders. After the report was published, the US currency did not even continue to grow, as it had grown by almost 300 points before.
Trading plan for the week of November 8-12:
1) The pound/dollar pair has not managed to overcome the upper boundary of the Ichimoku cloud. If it manages to gain a foothold above it once, then the trend may change to an upward one, and in this case, we recommend buying a pair, since the probability of forming a new upward trend will increase significantly. The first target will be the resistance level of 1.3862. Also, in the case of a second rebound from the level of 1.3461, you can buy with a target of 1.3770.
2) The bears managed to keep the pair below the Ichimoku cloud and can now try to build on their success. However, to do this, they need to overcome the support level of 1.3461. If the bears manage to do this, then the chances of further movement to the south will increase, and the target will be the support level of 1.3246. In this case, we recommend continuing to sell the pair.
Explanations to the illustrations:
Price levels of support and resistance (resistance /support), Fibonacci levels - target levels when opening purchases or sales. Take Profit levels can be placed near them.
Ichimoku indicators(standard settings), Bollinger Bands(standard settings), MACD(5, 34, 5).
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.
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