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GBP/USD 5M
The GBP/USD pair moved quite actively again on July 21. Despite the fact that there still aren't any new macroeconomic reports in the UK and the US, traders of the pound have found sufficient reason for active trading from the very beginning of the week. Of course, this is primarily due to the epidemiological situation in the UK, which made the pound bulls nervous. However, yesterday the tension began to subside, and the pound managed to noticeably strengthen. Unfortunately, traders did not manage to capitalize on this appreciation, since only one trading signal was formed during the day, and even that one occurred only at the end of the trading day, when most of the movement was left behind. The price did not cross a single important line or extreme level during the daytime. And it reached and surpassed the level of 1.3677 only by the end of the day, but by that time it was too late to open deals. Thus, at this time, the main thing is to understand whether the downward trend has ended for the pound. From our point of view, yes. Both for the pound and the euro. However, we should receive signals that confirm this on those timeframes and trading systems.
Overview of the EUR/USD pair. July 22. ECB meeting: moment of truth for the euro and the dollar.
Overview of the GBP/USD pair. July 22. Brits continue to be infected and dying from the coronavirus. The fourth "wave" is in full swing.
GBP/USD 1H
The pound/dollar pair completed the downward movement rather rapidly and started the upward movement no less rapidly on the hourly timeframe. We believe that the global upward trend, which has been going on for more than a year and a half, will now be restored. That is, the pair will return to its three-year highs around the 1.4240 level. However, it should be noted that there is still no trend line or channel for the pair that could help identify a new trend. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3590, 1.3677, 1.3731, 1.3754. Senkou Span B (1.3825) and Kijun-sen (1.3734) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. No major macroeconomic reports will be released on Thursday in the UK. Only a report on claims for unemployment benefits will be released in America, which is considered secondary. It is unlikely that traders will pay attention to it in the current situation.
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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