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GBP/USD 5M
The GBP/USD currency pair traded just perfectly on Friday. The price started its movement from the 1.3598-1.3607 area and stopped neatly near the Senkou Span B line (1.3510), thus passing about 100 points down. It should be noted that the fall began at the very beginning of the European trading session, so the Nonfarm report in the US only became the "last nail" for the pound. However, the British currency has also been getting more expensive all week, so a correction was necessary. But the pound showed what the correction should be after a protracted movement. In addition to NonFarm Payrolls reports and unemployment in the United States, there is not much to highlight in macroeconomic terms. In the morning, the index of business activity in the UK construction sector was published, but it is clearly "not to blame" for the fall of the pound, as it turned out to be higher than forecasts and amounted to 56.3 points in January.
As for trading signals, we have already said that it has, in fact, formed one. At the very beginning of the trading day, the pair settled below the level of 1.3598, so it was necessary to open short positions on this signal. In the future, the price did not meet any obstacles on its way down, not a single level, not a single line. Therefore, I calmly reached the Senkou Span B line, from which I bounced, forming a buy signal. Traders could close the short position before the publication of Nonfarm. In this case, the profit would be 40 points. If traders took a chance and hoped for a strong report, they would earn 70 points. It was also possible to open a long position on the buy signal, but it was formed almost at the same time as the US statistics were published. Therefore, it could be filtered out. But even if the traders did not do this, they also made a profit. Just a small one. In general, a very successful day, very good trend movement, unambiguous market reaction to statistics, accurate signals, good volatility.
COT report
We would call the latest Commitment of Traders (COT) report on the British pound very strange. Professional "non-commercial" traders increased their short positions during the last reporting week, which led to a new drop in their net position. Now the green line is again below the zero level, which signals the bearish mood of non-commercial traders. At the same time, in December 2021, the green and red lines of the first indicator moved far away from each other, and therefore began to move towards each other, which signals the end of the trend. Thus, now there is also reason to assume that a new, upward trend in the pound has begun. However, the major players are not in a hurry to stock up on the British currency yet, therefore, from the point of view of COT reports, the new upward trend is not entirely unambiguous. It is quite possible that the pound will still try to fall again to the level of 1.3163 before starting a new trend. Here, of course, you need to turn to technical analysis, which visualizes everything that is happening in the foreign exchange market. The situation with COT reports is not clear now, so caution is needed when making trading decisions.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. February 7. US Nonfarm provoked the beginning of the correction.
Overview of the GBP/USD pair. February 7. The euro and the pound have the opportunity to balance.
Forecast and trading signals for EUR/USD on February 7. Detailed analysis of the movement of the pair and trading transactions.
GBP/USD 1H
On the hourly timeframe, the pound/dollar pair has settled below the weak upward trend line, but it has not yet been able to continue moving below the Kijun-sen and Senkou Span B lines. However, the price declined very well on Friday, so it would be naive to believe that these two strong lines will also be overcome. In the new week, if there is a consolidation under them, then we can expect a further fall in the pound. Otherwise, the upward trend may resume. We highlight the following important levels on February 7: 1.3439, 1.3489, 1.3598-1.3607, 1.3667. The Senkou Span B (1.3510) and Kijun-sen (1.3515) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. No major events are scheduled for Monday in either the UK or the US. To some extent, this is even good, since traders can show their true attitude at this time. However, volatility, of course, may decrease, and the trend movement may weaken or be replaced by an outright flat. We need to be ready for this.
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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