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GBP/USD 5M
The GBP/USD pair also traded higher on Monday, May 3, after quotes fell last Friday. However, if the euro corrected by 50 points, then the pound offset almost all of Friday's losses. Since the movement for the pound was stronger, much more signals were formed during the first trading day of the week. Recall that there is still a swing movement on the higher timeframes. No important macroeconomic reports from the UK on Monday, so it was alright for traders to only pay attention to the US ISM Manufacturing PMI (marked with the number "1" in the chart). However, before that moment, the pair had already managed to go up more than 100 points, and after the publication of this report, the movement only continued, since the ISM index turned out to be much weaker than forecasts. The first trading signal was formed at the very beginning of the European session in the form of a price rebound from the extreme level of 1.3807. This is where traders had to open long positions. The next level that the price met on the way turned out to be the extremum level of 1.3835, which it immediately surpassed, so traders had to stay with longs. The next line was the Senkou Span B line, which the price also crossed without any problems, therefore, long positions still had to be opened. The pair rebounded from the extremum level of 1.3886, which served as a signal to close longs and open shorts. In total, you could have earned around 55 points on a long position. The sell signal in the form of a rebound from the 1.3886 level turned out to be false, so traders could have lost 14 points on it. But the price surpassed 1.3886 afterwards and then it was necessary to open longs again. The price moved above the critical line, and the next target level was 1.3975, which was located very far away. Thus, long positions could be closed 2-3 hours before Federal Reserve Chairman Jerome Powell's speech, that is, about 25 points in profit. In total, traders could have earned around 65 points of profit yesterday, which is just fine for a corrective Monday.
GBP/USD 1H
The power of the upward movement on the hourly timeframe was visually better. The bulls managed to neutralize almost all the losses on Friday, which once again proves the "swing" mode of the pound/dollar pair. Moreover, the swing is present on all timeframes, perhaps, with the exception of the 5-minute one. Also, there is no pronounced trend on the hourly timeframe, as well as a trend line or channel. Although the current movement cannot be called a flat, the trend is clearly absent. Therefore, this point must be clearly understood before entering the market. The price can move in any direction with any force. We believe that this week the pair can calmly resume its movement down 200 points within the swing from the 4-hour timeframe. We will continue to pay attention to the most important levels and lines: 1.3835, 1.3886, 1.3975 and 1.4008, as well as the Kijun-sen (1.3888), Senkou Span B (1.3860) lines. You are advised to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The nearest level/line should always be used as targets (exceptions - if the target is too close to the signal). No major events in the UK or the United States on Tuesday. However, this does not really matter right now, since the pair's movements are practically unpredictable in any case.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair fell by 90 points during the last reporting week (April 20-26). The last few Commitment of Traders (COT) reports have shown that the mood among professional players is becoming more bullish again, but in general they themselves do not know what to do with the pound in the past year. Look at the first indicator in the chart. The green line is the net position of the non-commercial group of traders. It constantly changes the direction of movement, intersects with the red line (net position of the commercial group). In general, it is now impossible to predict the pair's succeeding movement based on COT reports. The pound rose in value against the dollar from October to March, although the green and red lines showed no trend at that time.
Major players closed 1,100 buy contracts (longs) and got rid of 5,000 sell contracts (shorts). Thus, their net position increased by 3,900 contracts, and the mood became more bullish again. In general, it also remains bullish, since the total number of buy contracts from professional players exceeds the total number of sell contracts twice. And so, of course, we can expect the pound to rise further, but we still believe that the swing will continue at this time. Too many conflicting factors are at the disposal of the markets. Constant changes in the direction of movement of the green line indicate that big players do not know what to do with the pound in the long term.
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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