19.05.202604:25 Forex Analysis & Reviews: Intraday Analysis of GBP/USD on May 19. ICT Trading System. The Pound Fell More and Recovered More

GBP/USD Analysis 5M

The GBP/USD currency pair recovered on Monday, amid new hopes for peace in the Middle East. On Monday, it became known that Washington had softened its demands on Iran, which would be sufficient for a peace agreement. Of course, this list is still far from what Iran can realistically agree to, and Tehran has responded with its own list of demands, most of which Washington is not willing to meet. Thus, market optimism has emerged, but it is quite cautious. On the one hand, the parties have returned to the negotiation table (albeit remotely); on the other hand, there has been no significant progress. Nevertheless, it was evident that the US dollar could not continue to grow without new signs of escalation. Therefore, it may experience further declines on Tuesday, especially since it had quite a stroke of luck last week.

From a technical standpoint, the downward trend on the hourly timeframe is unquestionable. This is not just a trend; it is effectively a collapse. However, this collapse is unlikely to last long. Even last week, the pair's decline did not always appear justified or proportional to the news background affecting the currency market. Nonetheless, there are currently no grounds to expect an end to the downward trend. For that to happen, the British pound needs to break through at least the critical Kijun-sen line.

On the 5-minute timeframe on Monday, two trading signals were formed. During the European trading session, the price first bounced off the 1.3369-1.3377 area, then broke through it. The first sell signal turned out to be outright false, but the second signal allowed traders not only to open long positions but also to carry them over to Tuesday in anticipation of a stronger rise in the currency pair.

GBP/USD Analysis 4H

On the 4-hour timeframe, the British pound is also in a downward trend following last week's break of the upward structure. Since the price dropped sharply by 300 points, the CHOCH line is at the level of 1.3653. Throughout last week's decline, several bearish FVGs have been identified, but we have focused only on the most recent one. Movements in the GBP/USD pair still depend heavily on geopolitical factors, meaning geopolitics can fundamentally alter the technical picture. On Monday, the price returned to the FVG, which serves as a POI for short positions. However, a sell signal must now be confirmed in the M15-M30 timeframe within this area. If the FVG pattern is invalidated, the downward trend may end as quickly as it began.

GBP/USD Analysis 1H

On the hourly timeframe, the GBP/USD pair has been trading in only one direction—south—over the past week. The macroeconomic and fundamental backdrop continues to have little impact on the pair's movements, while geopolitics pulls the British pound down. However, we do not believe that the dollar will continue to strengthen without a real escalation in the Middle East. Positive news from the White House on Monday led to a 100-pip drop in the dollar.

For May 19, we highlight the following important levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3551) and Kijun-sen (1.3429) may also serve as sources for signals. It is recommended to set the stop-loss order to breakeven once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift during the day, which should be taken into account when determining trading signals.

On Tuesday, the UK will release data on the unemployment rate, changes in unemployment numbers, and wage reports. These are not the most significant reports and are unlikely to attract much market attention. In the US, only a secondary ADP report for the week is scheduled.

Trading Recommendations:

Today, traders may open short positions targeting the 1.3179-1.3187 area on a bounce from the Kijun-sen line or the 1.3465-1.3480 area. Long positions can be opened if the price consolidates above the 1.3465-1.3480 area, with a target of 1.3551. On the 4-hour timeframe, signals for new short positions should be expected from the bearish FVG in the area of 1.3405-1.3432.

Explanations for the Illustrations:

• Price levels of support and resistance – thick red lines where the movement may end. These do not serve as sources of trading signals.
• Kijun-sen and Senkou Span B lines – Ichimoku indicator lines transferred from the 4-hour to the hourly timeframe. These are strong lines.
• Extremum levels – thin red lines where the price previously bounced. These serve as sources of trading signals.
• Yellow lines – trendlines, trend channels, and any other technical patterns.
• CHOCH – change of trend structure.
• Liquidity – Stop Loss, pending orders that market makers use to build their positions.
• FVG – Fair Value Gap. Price moves very quickly through these areas, indicating a complete absence of one side in the market. Subsequently, the price tends to return and react to such areas in continuation of the main trend.
• IFVG – Inverted Fair Value Gap. After returning to such an area, the price does not react to it; it breaks impulsively and then tests it from the other side.
• OB – Order Block. The candle on which a market maker opened a position with the aim of gathering liquidity to form their position in the opposite direction.