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The GBP/USD currency pair resumed its downward movement on Monday, although it failed to update its local lows. The pair showed a fairly strong correction on Friday, but could not continue it on Monday. Thus, the situation is almost the same as in the case of the euro/dollar pair: even when there were favorable conditions for this, the euro and the pound failed to correct against the dollar. This suggests that traders are still not only not considering buying eurocurrencies, but are also in short positions, which are not going to be closed in the near future. Perhaps something will change this week for the pound due to the Bank of England meeting, at which the rate is likely to be raised for the fourth consecutive time. But for now, we don't really count on it. The British pound has slightly less reason to fall than the euro, but this does not play a special role now.
There was only one trading signal on Monday and it was as perfect as in the case of the euro! The price rebounded from the critical Kijun-sen line (3 points error), after which it began a strong downward movement and fell by 100 points. Since the nearest target level was not reached, the deal had to be closed manually in the late afternoon. That is, it was absolutely easy to earn 70-80 points on it. It turns out that Monday turned out to be almost perfect for both major currency pairs. In both cases, only one trade was opened, each one turned out to be very profitable.
The latest Commitment of Traders (COT) report on the British pound has witnessed a new increase in bearish sentiment among professional traders. During the week, the non-commercial group opened 3,600 long positions and 14,300 short positions. Thus, the net position of non-commercial traders decreased by another 11,000. Such changes are significant for the pound. The non-commercial group has already opened a total of 110,000 short positions and only 40,000 long positions. Thus, the difference between these numbers is almost threefold. This means that the mood among professional traders is now "pronounced bearish" and this is another factor that speaks in favor of the continuation of the fall of the British currency. Note that in the pound's case, the data from the COT reports accurately reflects what is happening in the market. Traders are bearish and the pound is falling against the US dollar. We do not see any reason to assume the end of the downward trend. COT reports, foundation, geopolitics, macroeconomics, technique, all speak in favor of the fall of the pound and the rise of the dollar. Of course, the fall of the pound/dollar pair cannot continue forever, there must be at least upward corrections, but so far, based on COT reports, we cannot assume when the downward trend will end.
Overview of the EUR/USD pair. May 3. The European Union is almost ripe for the introduction of an oil embargo.
Overview of the GBP/USD pair. May 3. Boring Monday, another fall of the pound, waiting for the Bank of England meeting.
Forecast and trading signals for GBP/USD on May 3. Detailed analysis of the movement of the pair and trading transactions.
On the hourly timeframe, you can clearly see how much the pound has fallen over the past two weeks and how much it has corrected. The British currency now has formal chances of growth to the Senkou Span B line, as it still managed to settle above the critical line. However, so far the market does not show much desire to buy the pound. Maybe this week the situation will change a bit, as the pair has fallen too much lately, but this is just a hypothesis. For May 3, we highlight the following important levels: 1.2251, 1.2410, 1.2601, 1.2674, 1.2762. Senkou Span B (1.2749) and Kijun-sen (1.2512) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. There are no major events or reports scheduled for Tuesday in the UK. It's the same in the US. However, this may not be a problem. Yesterday there were also very few macroeconomic statistics, but the pair showed both trend movement and good volatility. But today you will have to trade exclusively on technique, although, perhaps, this is for the best.
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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