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Analysis of GBP/USD 5M.
The GBP/USD currency pair was in a sideways movement all day on Tuesday. This is visible on the 5-minute timeframe, even if there were not two linear regression channels that are directed sideways. Nothing was interesting at all on Tuesday. Neither in the foreign exchange market, nor macroeconomic terms, nor in geopolitical terms. It seems that the markets have decided to celebrate International Women's Day, with which we congratulate all representatives of the fair sex. Volatility was low - about 65 points and the main news of the day was a possible US ban on any energy carriers from the Russian Federation. However, the foreign exchange market did not react to this news in any way. But oil has risen in price to $ 130 per barrel and is likely to continue to grow. At the same time, the Central Bank of the Russian Federation decided not to open the Moscow Stock Exchange on March 9. Recall that the exchange has been closed since February 25 and many experts fear that when it opens, the ruble may well collapse to 200-300 rubles for 1 dollar. It is also worth highlighting the statements of Boris Johnson, who on the one hand said that it would be difficult for Europe to abandon Russian oil and gas overnight, and on the other hand said that the UK would gradually abandon hydrocarbons from the Russian Federation in 2022.
As for trading signals, there were none on Tuesday. And, from our point of view, it's for the best. It should be remembered that any flat is dangerous for traders. Yes, sometimes the price in a side-channel moves between its borders, even forming good signals at the same time. But this is not always the case. A lot of false signals are formed more often.
COT Report:
The latest COT report on the British pound showed an increase in bullish sentiment among professional traders. And a week earlier, the strengthening of the "bearish" mood. In general, the mood of the major players changes too often, which is seen by the two indicators in the illustration above. At the moment, the net position of the "Non-commercial" group is near zero, which means a "neutral" mood. The same conclusion is confirmed by the absolute data on the number of open contracts. There are 51 thousand of them for purchase now, and 50 thousand for sale. That is almost complete equality. Moreover, since July last year, professional traders have not been able to decide where to trade the British pound. Only in December, there was a serious strengthening of the "bearish" mood, which led to a significant drop in the UK currency. The rest of the time, the players cannot decide in the medium term what to do with the pound. Therefore, the absence of a strong fall in the British pound partly corresponds to the COT reports. However, we still believe that COT reports are not the best tool for forecasting right now. At a time when the whole world is increasing demand for the dollar as a reserve currency, we can expect growth of this particular currency, despite any data from COT reports. This is exactly the picture we are seeing now in the euro currency, where purchases are growing, while the currency itself is falling. Thus, geopolitics remains in the first place in terms of importance.
Analysis of GBP/USD 1H.
On the hourly timeframe, a downward trend is visible to the naked eye, which is supported by a descending trend line. We have redrawn several levels and now the price is between 1.3082 and 1.3134, and there are simply no lower levels. Thus, the further fall of the British currency will be quite difficult to work out due to the small number of signals and the lack of target levels. On March 9, we highlighted the following important levels: 1.3082, 1.3134, 1.3273, 1.3367. The Senkou Span B (1.3454) and Kijun-sen (1.3249) lines can also be signal sources. Signals can be "bounces" and "surmounts" 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. Also in the illustration, there are support and resistance levels that can be used to fix profits on transactions. There are no major events or publications scheduled for Wednesday in the UK and the US. Thus, during the day, traders will be able to pay attention again only to geopolitical news, if there are any. We believe that the probability of a stronger correction is high, but Monday and Tuesday showed that traders are not ready to take profits on short positions and open long ones yet.
Explanations to the illustrations:
Price levels of support and resistance (resistance /support) - thick red lines, near which the movement may end. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines - the lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour one. Are strong lines.
Extreme levels - thin red lines from which the price bounced earlier. They are sources of trading signals.
Yellow lines - trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts - the net position size of each category of traders.
Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.
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