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On the hourly chart, the GBP/USD pair continued its upward movement on Monday after rebounding from the significant support zone of 1.2611–1.2620. By Monday evening, the price tested the resistance zone of 1.2690–1.2705. A rebound from this zone would favor the US dollar and signal a resumption of decline towards 1.2611–1.2620. If the quotes consolidate above 1.2690–1.2705, it will increase the likelihood of further upward movement towards the next resistance zone of 1.2788–1.2801.
The wave situation has shifted slightly. The latest upward wave has broken the peak from June 4th, while the new downward wave managed to break the low of the wave from June 10th. Thus, the trend for the GBP/USD pair has shifted to "bearish." I am cautious about concluding that a "bearish" trend has begun, as the bulls have not entirely left the market. The emerging advantage of the bears could easily be broken. A new upward wave may turn out to be corrective, after which a new downward wave could form, maintaining the "bearish" trend. However, the advantage of the bears in the market at this time (if any) is very weak.
The news background on Monday did not interest traders because there was nothing to interest them. Bulls have launched an offensive, but it is currently unfounded and corrective. Later this week, GDP reports for the US and the UK will be released, which could determine the further dynamics of the pair. Significant growth in the pound should not be expected right now, but ignoring chart signals is also not the best approach. It's worth noting that traders have the opportunity to trade not only based on news but also chart patterns. If these two types of analysis point in different directions, one of them will provide incorrect forecasts. Therefore, consolidation above the zone of 1.2690–1.2705 will most likely allow for expecting stronger growth of the pound.
On the 4-hour chart, the pair has made a turnaround in favor of the US dollar and consolidated below the ascending trend line. However, the rebound of the pair's rate from the level of 1.2620 has already favored the pound and initiated an ascent. Therefore, bulls may conduct sluggish attacks towards the nearest levels on the hourly chart for some time. If the pair consolidates below the level of 1.2620, it will increase the probability of further decline of the pound towards the next level at 1.2450. There are no imminent divergences today.
Commitments of Traders (COT) Report:
The sentiment among "Non-commercial" traders for the last reporting week has become slightly less bullish. The number of long positions held by speculators decreased by 4380 units, while the number of short positions increased by 120 units. The bulls still maintain a solid advantage. The gap between the number of long and short positions stands at 48 thousand: 106 thousand long positions versus 58 thousand short positions.
However, there are excellent prospects for the pound to continue falling. Graphic analysis has provided several signals of a break in the bullish trend, and bulls cannot sustain continuous attacks. Over the last three months, the number of long positions has increased from 102 thousand to 106 thousand, while the number of short positions has risen from 44 thousand to 58 thousand. Over time, major players will continue to reduce their buy positions or increase their sell positions, as all potential factors for buying the British pound have already been exhausted.
News Calendar for the US and UK:
On Tuesday, the economic events calendar contains no interesting entries. The influence of the news background on market sentiment will be absent today.
Forecast for GBP/USD and Trader Advice:
Sales of the pound are possible if it rebounds from the zone of 1.2690–1.2705 with a target of 1.2611–1.2620. Purchases could be considered if they rebound from the level of 1.2611 (or 1.2620) with a target of 1.2690–1.2705. This target has been achieved. Holding purchases is advisable if the pair closes above the zone of 1.2690–1.2705 with a target of 1.2788.
The Fibonacci levels are plotted 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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