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GBP/USD 15M
The lower linear regression channel turned to the downside on the 15-minute timeframe, while the higher one is still directed to the upside. As we said yesterday, everything depended on the 1.3745 level. And on this timeframe, we clearly see that the price spent just 45 minutes above it - 3 candles. There was no consolidation at the end of the hour, although on the hourly timeframe it looked like a break. But this is a false breakout, a similar situation emerged for the euro yesterday.
GBP/USD 1H
The GBP/USD pair almost mirrored the EUR/USD pair on Wednesday. Both pairs began to decline early in the morning, which means the dollar strengthened ahead of the announcement of the results of the Federal Reserve meeting. The pound/dollar pair even formed a buy signal during the European session, which turned out to be false, and it is easy to verify this by looking at the 15-minute timeframe. We said that if the quote surpasses the 1.3745 level, it will serve as a buy signal. However, in the end there was a rebound from this level, and we recommended the critical line and the 1.3635 level to be used as a sell signal. At least the first target was reached. Then traders could leave the market, since the results of the Fed meeting are always an unpredictable thing, and the market's reaction to them is even more unpredictable. As a result, traders could have earned about 50 points on our recommendations on Wednesday. Further. So far, the upward trend continues, as although the price has left the upward channel, it continues to trade in the immediate vicinity of its 2.5-year highs. Thus, bull trading remains preferable, although now there is no trend line or channel.
COT report
The GBP/USD pair rose by 70 points during the last reporting week (January 12-18). It doesn't seem like a lot, but the growth is stable. But the latest Commitment of Traders (COT) report was disappointing again. Recall that over the past two to three months, the vast majority of reports indicated minimal changes. In most cases, professional traders tended to close contracts for the pound, both for buying and selling. Only the penultimate report showed that the number of buy contracts (longs) increased by 10,460 at once, which is a lot. The latest report showed that non-commercial traders have returned to their favorite pastime - a sluggish reduction in the number of contracts. 2,000 buy contracts and 3,100 sell contracts were closed. Thus, the net position for the "non-commercial" group of traders has become more bullish. However, the indicators show a completely different picture. While the numbers from the COT report could tell traders that the upward trend was maintained (and it is), the indicators show that the mood of non-commercial traders changes about once a month. The green line of the indicator (net position of the non-commercial group) constantly changes its direction of movement and intersects with the red line (net position of the commercial group), which, in fact, means that there is no trend. However, there is a trend, and the changes displayed by the COT report are minimal and do not allow any long-term conclusions to be drawn.
Wednesday was an unremarkable day for the pound and the UK in fundamental terms. Epidemiological problems in Great Britain remain acute. However, this is already a kind of tradition for the pound. From the very beginning of the epidemic, Great Britain suffered the most from the coronavirus. At the time of the first wave, it was in the UK that the most people died among all European countries. Then it was in the UK that not only the second lockdown was introduced, but also the third. It was in Britain that a new strain of the virus was discovered. And now it has become known that the UK is the first European country to cross the line of 100,000 deaths from the pandemic. However, all these problems do not concern market participants yet.
Macroeconomic reports in the UK and US will be released on Thursday. In addition to GDP, we have the balance of foreign trade, the number of applications for unemployment benefits (primary and secondary), as well as several other minor reports. The market may react to the GDP report. The rest of the reports are just interesting. Primary applications for unemployment benefits have recently jumped to almost a million, but the total number of secondary applications continues to decline in the medium term. And the balance of foreign trade in goods remains absolutely disastrous for the United States at -$83.4 billion in December alone.
We have two trading ideas for January 28:
1) The price left the upward channel, but the upward trend was restored anyway. Therefore, you are advised to trade bullish when the price rebounds from Senkou Span B (1.3597) or the support area of 1.3606-1.3626 while aiming for resistance levels 1.3700 and 1.3745, which have already been clearly reached several times. Take Profit in this case will be up to 100 points. You need to be prepared for a possible sharp reversal when the US report is released.
2) Sellers tried to start a new downward trend, but could not overcome the 1.3606-1.3626 area. Thus, you are advised to consider sell positions when the price rebounds from the 1.3745 level while aiming for the Kijun-sen line (1.3683) and the 1.3635 level. Take Profit in this case will be up to 100 points. A downward movement is not a trend, so if you trade, then do so in small lots.
Forecast and trading signals for EUR/USD
Explanations for illustrations:
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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