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On the hourly chart, the GBP/USD pair executed a minor rebound from the 1.2488–1.2508 zone on Wednesday and continued its decline. By the end of the day, it consolidated below the 1.2363–1.2370 zone, and by Thursday morning, it reached the corrective level of 261.8% – 1.2303. A rebound from this level today may signal a reversal in favor of the pound and some growth, at least toward the 1.2363–1.2370 resistance zone. However, a consolidation below 1.2303 increases the likelihood of further decline.
The wave situation is clear. The last completed downward wave broke below the low of the previous wave, while the last upward wave failed to break the previous peak. Thus, the "bearish" trend formation continues, leaving no doubt. To conclude this trend, the pound must rise at least to 1.2569 and close confidently above this level.
On Wednesday, the pound could have taken a breather, but instead, traders sold it throughout the day. The UK lacked any significant news background, while the US ADP report failed to support the dollar. Consequently, the pound's decline (which continues today) had no specific reasons. The "bearish" trend persists, which is why sales far outweigh purchases. In this environment, the pound can only hope for very weak data from critical US reports, such as Nonfarm Payrolls and unemployment data, scheduled for tomorrow. However, even before Friday, the pound may lose another 100 points as bears are ready to attack even in the absence of economic events. In short, the pound's decline raises no questions.
On the 4-hour chart, the pair rebounded from the 76.4% corrective level at 1.2565, turned in favor of the US dollar, and fell to the 100.0% Fibonacci level at 1.2299. A rebound from this level may signal a reversal in favor of the pound and some growth toward 1.2432. However, consolidation below 1.2299 will increase the chances of further decline. The downward trend channel points to the dominance of bears, which they do not intend to lose anytime soon. Only a close above the channel will indicate strong growth for the pound.
The sentiment of the "Non-commercial" trader category remained almost unchanged in the latest reporting week. The number of long positions held by speculators decreased by 3,707 units, while short positions decreased by 1,383 units. Bulls still have the upper hand, but their advantage has been dwindling in recent months. The gap between long and short positions is now only 19,000: 84,000 versus 65,000.
In my opinion, the pound still faces downward pressure, and COT reports signal strengthening bearish positions almost weekly. Over the last three months, the number of long positions has decreased from 160,000 to 84,000, while short positions have grown from 52,000 to 65,000. I believe professional players will continue to reduce long positions or increase short positions over time, as all potential buying factors for the pound have already played out. Graphical analysis also supports the pound's decline.
Thursday's economic calendar contains no significant entries. The impact of the news background on trader sentiment today is expected to be minimal.
Fibonacci grids are built between 1.3000–1.3432 on the hourly chart and 1.2299–1.3432 on the 4-hour chart.
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