GBP/USD 1H
The GBP/USD pair continued its upward movement on Tuesday without any doubts. Buyers significantly found the strength to overcome the resistance area of 1.2636-1.2660, from which the price had previously rebounded at least four times. There was no stop there today. Thus, the bulls brought the pair to the second resistance level of 1.2755 by the end of the day. Now the nearest target for long positions is the June 10 high at 1.2812. There are no trend lines or channels at this time, which makes it somewhat difficult to determine the trend, the size of pullbacks and corrections. However, in any case, the bears are now openly resting and do not think about intercepting the initiative.
GBP/USD 15M
Both linear regression channels are directed upwards on the 15-minute timeframe, which corresponds to the general trend that has developed on the higher chart. There are no signs of corrective movement. The latest Commitment of traders (COT) report showed minimal changes compared to the previous one. The British currency mainly continued to strengthen until July 14 (the final date of the report), so it is not surprising that at this time, according to the report, non-commercial traders continued to open Buy-contracts. The non-commercial category only opened 182 Sell-contracts (and only 12 a week earlier). However, the beginning of a new week gave the pair a chance to overcome the 1.2636-1.2660 area, which returned traders' interest in buying the pound. Thus, the pound sterling has become more expensive again from July 15 to the present day (the final one for the next COT report). This means that the new COT report may show an increase in the net position. If this trend continues, it will raise the chances of strengthening the pound further.
The fundamental background for the GBP/USD pair seems to have completely shifted towards the coronavirus theme. In recent weeks, we have repeatedly concluded that the US dollar is falling against its main competitors, solely due to the difficult epidemiological situation in America, and, as a result, the almost complete inaction of the White House in countering the epidemic. We also noted that US President Donald Trump is concerned about his re-election prospects and the US economy, rather than the fact that the United States is ranked first in the world in terms of the number of diseases and deaths from the "Chinese virus". From our point of view, all this played a significant role in forming a low demand for the dollar. At the beginning of this week, data came from the UK that scientists at Oxford University made a breakthrough in creating a vaccine against the coronavirus. The pound sterling jumped with new forces following this information. Thus, new information on the coronavirus from Britain and the United States could once again affect the mood of the market. Especially since Trump resumes briefings on the coronavirus, so we can get a new batch of funny comments in the near future. As for the average economic data, they don't exist. There is no news on the most exciting Brexit topic for the GBP/USD pair. The end of July has already arrived, and British Prime Minister Boris Johnson is not even going to Brussels yet. However, in recent days, EU leaders have been busy with the EU summit. So in the coming week, we are still waiting for information from Johnson in the capital of Belgium.
There are two main scenarios as of July 22:
1) The outlook for the bulls continues to be very welcoming. Buyers managed to overcome an important resistance and now the pair's quotes can add another 100 points. Thus, you are advised to buy the pound while aiming for 1.2812 and 1.2846, if traders manage to confidently overcome the current target of 1.2755. Potential Take Profit in this case will amount to another 40 to 80 points.
2) Sellers are advised to consider short positions with goals of the Senkou Span B line (1.2554) and the support level of 1.2474, but to do this, you need to wait until the Kijun-sen line (1.2638) is overcome. In any case, this is not a plan for the next few days, since the price is very far from Kijun-sen, and the fundamental background does not allow us to count on the dollar's firm growth yet. Potential Take Profit ranges from 60 to 150 points.
The material has been provided by InstaForex Company - www.instaforex.com