GBP/USD 1H
The GBP/USD pair moved almost identical to the European currency on August 10. For the time being. The pound/dollar pair did not sharply jump closer to the end of the trading day, but given the weak volatility on Monday, this rise was enough to block all the downward movement before that. Therefore, the British pound finished the day in positive territory. However, its prospects remain dim, as traders failed to break the 1.3169 level several times. By the way, the prospects for the dollar also remain very vague, due to the fundamental background from the US. Thus, the pair is now in a kind of stupor, since there is not enough reason either to continue growing or to start falling.
GBP/USD 15M
The lower linear regression channel turned up on Monday on the 15-minute timeframe, showing no downward trend on that day. The latest Commitment of Traders (COT) report the British pound, which was released on Friday, finally matched what is happening now in the market. Recall that two COT reports previously showed a decrease in the net position of non-commercial traders, which, in fact, means that the bullish mood is weakening. That is, the most important category of "non-commercial" traders reduced (roughly speaking) purchases of the British pound during the previous two weeks and at the same time, the UK currency became more expensive. However, the latest COT report finally showed an increase in the number of Buy-contracts for non-commercial traders, by almost 5,000. At the same time, they also closed Sell-contracts, which were reduced by 3,500. Thus, the total net position for this category increased by 8,500. The pound lost just about 140 points at the end of last week and the beginning of the new week, if you count from the last high. This is very small in the context of COT reports and the concept of a trend. This is not even a correction in the medium term.
The fundamental background for the GBP/USD pair did not change on Monday. However, as recently as last Friday, one of the members of the British government, Michael Gove, gave an interview completely unnoticed, saying that the last round of negotiations with Brussels ended with some progress, which gives hope for the signing of a trade deal in September. What is remarkable is that neither Boris Johnson, nor Michel Barnier, nor David Frost (actually, the chief negotiator from the UK) said anything like this in the media. It is unclear as to where Gove got this information. Moreover, British Prime Minister Boris Johnson was due to personally fly to Brussels for talks with top EU officials back in July. It is August 11 today, and the British prime minister has not been to Brussels, and does not speak about this in an interview. Thus, from our point of view, absolutely nothing has changed in this issue and there is no reason for optimism. There are only regular rumors that the European Union is allegedly ready to concede on issues of fishing and European standards. These rumors are not confirmed by anything. Official information - six rounds of negotiations failed, no progress was made on the key four issues.
There are two main options for the development of events on August 11:
1) Buyers continue to dominate the market, only taking a timeout in recent days. They did not manage to gain a foothold above the previous local high of 1.3169, so we recommend opening new purchases of the British currency, but not before breaking the 1.3169 level while aiming for the resistance level of 1.3275. In this case, the potential Take Profit is about 90 points. Formally, longs can be opened after overcoming the Kijun-sen, but we would recommend waiting until the 1.3169 level has been overcome.
2) The bears stayed below the Kijun-sen line with great difficulty. Thus, we can now consider trading downward with the targets at the support level 1.2956 and the Senkou Span B line (1.2919). Potential Take Profit in this case is from 90 to 120 points. However, you should be careful with sales. There are many factors working in favor of starting the fall, but the bears are still very weak. Stop Loss can be placed above Kijun-sen.
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