Forecast and trading signals for GBP/USD on December 7. COT report. Analysis of Friday. Recommendations for Monday



Both linear regression channels are directed to the upside on the 15-minute timeframe, which is fully consistent with what is happening on the hourly timeframe. Despite the regular pullbacks and changes in the direction of movement, the upward trend continues. Therefore, the main thing now is the hourly timeframe, on which the movement is much better seen.



The GBP/USD pair made three breakthroughs in different directions at once last Friday. First down, then up, then down again. Thus, the pair continues to move in a very difficult and inconvenient manner. The pair's quotes dropped to the critical Kijun-sen line last Friday, which can help produce a new buy signal if a rebound follows from it. This is quite possible, given the incessant "swing". And vice versa, if the pair goes below the Kijun-sen and the support area of 1.3396-1.3404, then the probability of sustaining the downward movement will increase. Take note that a new rising channel has appeared, which is quite formal and nominal. We remind you that just recently the pair's quotes were in a 100-point horizontal channel, which is also within this rising channel. Well, the fundamental background is still such that we could only wonder why the pound is growing?

COT report


The GBP/USD pair did not grow and did not fall by a single point during the last reporting week (November 24-30). There were no price changes during this period. But in general, there was still an upward trend that extended into the following week. If in the case of the euro/dollar pair, we had been waiting for the beginning of a new downward trend, in the pound/dollar pair's case, the Commitment of Traders (COT) reports did not allow such conclusions to be drawn. You only need to look at both indicators in the chart to understand that there is no trend in the mood of major players. The first indicator constantly shows a shift in the mood of commercial and non-commercial traders from bearish to bullish and vice versa. The second indicator constantly shows that the net position of the "non-commercial" group is growing and decreasing. That is, we can not draw conclusions regarding the pair's future from the COT reports. Non-commercial traders opened 3,600 new Buy-contracts (longs) and closed 4,400 Sell-contracts (shorts) during the reporting week. The net position immediately increased by 8,000, which is a lot for the pound. But there were no price changes. The number of open Buy and Sell contracts for the non-commercial group is practically the same.

The fundamental background for the pound came down to the same topic of Brexit trade talks and US reports. Traders of both the euro/dollar and pound/dollar pairs ignored the US reports. The pound is still extremely overbought and unreasonably appreciated. Last week, both London and Brussels promised to complete negotiations by Wednesday, and on Sunday, there was an announcement that David Frost and Michel Barnier decided to hold another round of negotiations in order to try to reach an agreement before the end of the year. 146 talks. No one is talking about the fact that the Parliaments had time to ratify the agreement. Ursula von der Leyen, the head of the European Commission, who is not characterized by empty optimism, recently said that there are still serious differences between the parties on three key issues. It is probably not necessary to say what these issues are. A trade is impossible without solving all three. Thus, we can only wait until both parties declare a complete failure or that negotiations will proceed as long as necessary, without deadlines that are completely inappropriate in such a serious matter.

No important reports or events scheduled for the EU and the US on Monday. Therefore, the pair's volatility may slightly decrease, although we can't say it has been high in recent days. The nature of trades will most likely remain unchanged. Thus, we are looking for trading signals using the technique, we are waiting for official information on trade talks. There is nothing else to do.

We have two trading ideas for December 7:

1) Buyers for the pound/dollar pair keep the initiative in their hands. If they manage to keep the quotes above the Kijun-sen line (1.3412), then after a rebound from this line, you can open new longs while aiming for the resistance level of 1.3520. Take Profit in this case will be up to 80 points. At the same time, there is a high likelihood of a "swing" that has been present last week.

2) Sellers are still out of work. We recommend selling the pound/dollar pair while aiming for the lower line of the rising channel if the bears manage to get the pair to settle below the Kijun-sen line (1.3412) and the support area of 1.3396-1.3404. Take Profit in this case can be up to 40 points. You can sell the pound once we overcome the rising channel.

Forecast and trading signals for EUR/USD

Explanations for illustrations:

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.

The material has been provided by InstaForex Company -