GBP/USD 5M
The GBP/USD pair was trading much more volatile and more attractive than the EUR/USD pair on Tuesday, but at the same time it did not form a normal signal. No major reports released in the UK and US either, so there was nothing for traders to react to. In general, the upward trend continues, but at the same time the pair has managed to climb into the horizontal channel, which will be more visible on the hourly timeframe. The first buy signal was generated on the 5-minute timeframe at the very beginning of the European trading session. The quotes have surpassed the extremum level of 1.4181 and it is good that they managed to go up after that 20 points, which made it possible to set Stop Loss to breakeven. After that, the quotes returned to the level of 1.4181 and traded strictly "according to it" for about two hours. It was quite a difficult moment for traders. You shouldn't have opened a short position, because the Kijun-sen line lies just below the level of 1.4181, from which there could be a rebound. A long position should not have been opened either, since two false signals had already been formed near the level 1.4181 earlier, which is no longer relevant since yesterday and has also been removed from the charts. In the end, the pound/dollar pair still formed a signal that could be worked out. The price surpassed the critical line, which lay at 1.4167, which made it possible for traders to open short positions. At the time when the sell signal was being formed, the pair had already gone down by 60 points from the high of the day, so it would be naive to believe that it will go 70 more with an empty calendar of macroeconomic events. As a result, the short position should have been manually closed by the middle of the US session, as the pair usually either begins to correct or goes flat in the evening or at midnight. We do not recommend rescheduling trades to the next day, and our trade was not closed either by Stop Loss or Take Profit. Therefore, it was necessary to manually close it, profit is around 30 points.
Overview of the EUR/USD pair. May 26. The central banks of Great Britain, the United States and the European Union will raise rates simultaneously and not soon.
Overview of the GBP/USD pair. May 26. Bank of England: lower rates... no, we'd better raise... no, let's leave everything as it is!
GBP/USD 1H
The British pound fell into the horizontal channel at 1.4100-1.4220 on the hourly timeframe, which is not very similar to the side channel. The pair spent the last few days in this range. Yesterday the quotes even managed to go beyond the upward trend line, but in the current situation, this does not mean that the upward trend is over. The bears have not yet managed to settle below the Senkou Span B line. The downward movement from the local high is only 120 points. Moreover, a possible lateral channel. In general, so far we cannot conclude that the upward movement is over. We continue to draw your attention to the most important levels, of which there are very few now, and the lines and to trade from them: 1.4080 and 1.4240. Senkou Span B (1.4112) and Kijun-sen (1.4167) lines can also be sources of signals. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. The Bank of England's representative is scheduled to speak again in the UK on Wednesday, this time it's Jonathan Haskel, but the market is unlikely to pay much attention to this speech. There won't be any important information from America.
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 10 points during the last reporting week (May 11-17). In general, the pound continues to rise in price, which can clearly be seen in the chart above. Major players have resumed building up long positions since about December 2020. But at the same time, even according to Commitment of Traders (COT) reports, third-party global factors are clearly visible, which also support the pound. See for yourself. Until last December, when the upward trend in the pound continued, commercial and non-commercial traders did not really even know what to do with the pound. At that time, we recall, it was completely unclear how Brexit would end up and whether there would be a trade deal, and what awaits the UK in general. The red and green lines of the first indicator constantly crossed, which indicates the absence of a trend. But the pound was still growing. Therefore, even from this point of view, there is a serious imbalance in the money supply of Britain and the United States. Otherwise, the picture is as follows: neither the big players, nor the small ones bought the pound, but it grew anyway. It doesn't work that way. If market participants did not buy the pound, then it could grow only due to non-market factors, in particular, the intervention of the Federal Reserve and the Bank of England. Now the COT reports show that professional traders have started to buy the pound again, but they are not doing it very zealously. Rather, they try to simply follow the trend that is being formed without their much involvement. For example, a group of non-commercial traders closed 3,800 Buy contracts (longs) and 1,500 Sell contracts (shorts) during the reporting week. Thus, the net position for this group has decreased, which means that the bullish sentiment is weakening. It is this indication, not that the bearish mood has strengthened. The bears continue to rest now.
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.
