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On the hourly chart, the GBP/USD pair made a third rebound from the support zone of 1.2611–1.2620 on Friday, leading to a reversal in favor of the pound and beginning a growth process towards the resistance zone of 1.2690–1.2705, which continues today. A rebound from the 1.2690–1.2705 zone will again favor the US dollar and a return to the 1.2611–1.2620 zone. The pair remains in a sideways trend between these two zones. A close above 1.2690–1.2705 will suggest further pound growth towards the next resistance zone of 1.2788–1.2801.
The wave situation remains the same. The last upward wave broke the peak from June 4, and the new downward wave (still forming) managed to break the low of the wave from June 10. Thus, the trend for the GBP/USD pair has shifted to "bearish" and remains so. I am cautious about concluding the beginning of a "bearish" trend, as the bulls have not completely left the market. The emerging advantage of the bears can easily be overturned. However, at this time, the zone of 1.2690–1.2705 shows that the bears still have slightly better prospects than the bulls.
The information background on Friday allowed the bulls to launch a new attack, as the GDP in the first quarter in the UK grew stronger than traders expected. However, trader activity was at a minimal level on Friday. Yet on Monday, when there were no reasons to buy the pound, the pair showed a sharp upward surge. The bulls' attacks will not continue without an information background. There will be many news releases this week, so the bulls may receive support. But until these news releases come out, I would not conclude that the pound has the advantage. All the pound's growth could end around the nearest resistance zone. Currently, the market remains sideways, and it is necessary to exit the horizontal corridor first before concluding the bulls' or bears' advantage in the short term.
On the 4-hour chart, the pair reversed in favor of the US currency and consolidated below the ascending trendline. After rebounding from the 1.2620 level, the pound grew slightly. However, the "bearish" divergence in the CCI and RSI indicators suggests a reversal in favor of the US currency and a resumption of the decline. Consolidation of the pair below the 1.2620 level will increase the likelihood of further decline towards the next level of 1.2450.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" category of traders became slightly less "bullish" over the last reporting week. The number of long positions held by speculators decreased by 3,373 units, while the number of short positions increased by 200. Bulls still have a solid advantage. The gap between the long and short positions is 44 thousand: 102 thousand versus 58 thousand.
The pound still has prospects for a decline. Graphical analysis has provided several signals indicating the breakdown of the "bullish" trend, and bulls cannot attack indefinitely. Over the past three months, the number of long positions has increased from 98 thousand to 102 thousand, while the number of short positions has grown from 54 thousand to 58 thousand. Over time, major players will continue to shed their long positions or increase their short positions, as all possible factors for buying the British pound have already been accounted for. However, it should be noted that this is just an assumption. Graphical analysis still indicates the weakness of the bears, who can't even "take" the 1.2620 level.
News Calendar for the US and UK:
UK – Manufacturing PMI (08:30 UTC).
US – Manufacturing PMI (13:45 UTC).
US – ISM Manufacturing PMI (14:00 UTC).
On Monday, the economic events calendar includes several important entries, among which the ISM index stands out. The impact of the information background on market sentiment today may be moderate in the second half of the day.
GBP/USD Forecast and Trading Tips:
Sales of the pound are possible on a rebound from the 1.2690–1.2705 zone, targeting 1.2611–1.2620. Purchases could be considered on a rebound from the 1.2611–1.2620 zone on the hourly chart, targeting 1.2690–1.2705. This target has almost been achieved. New purchases can be made upon a close above 1.2690–1.2705, targeting 1.2788–1.2801.
Fibonacci levels are built from 1.2036 to 1.2892 on the hourly chart and from 1.4248 to 1.0404 on the 4-hour chart.
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