Trading plan for the GBP/USD pair for the week of December 21-25. New COT (Commitments of Traders) report. Negotiations on

GBP/USD - 24H.


The GBP/USD currency pair, after a very encouraging drop of 400 points a week earlier, rose by 500 this week. Thus, the price has updated 2.5-year highs and resumed the formation of an upward trend. As in the case of the euro, we continue to argue that there are no fundamental reasons for the pair's growth. That is, the pound sterling, like the euro currency, continues to grow solely on speculative factors. The British currency is overbought, and finding an answer to the question of why the pound is being bought if the UK is on the edge of an abyss called "Brexit without a deal" is generally impossible to explain. However, we have already said more than once that this is a market. Here you can never predict the movement of the pair with a probability of 100%. There are such periods when it is impossible to understand why a particular currency is growing at all. But 2020 also brought many other "surprises", so you can not be surprised at what is happening in the foreign exchange market. This is not the strangest thing that happened in the past year. Thus, at the moment, we can conclude that the upward trend continues, however, we are still waiting for its completion, since even speculative growth cannot continue forever.

COT report.


During the last reporting week (December 8-14), the GBP/USD pair increased by 80 points. However, the COT report in the last reporting week again gave us such data that does not allow us to make any specific conclusions and forecasts. The changes were again minimal and contradictory. Professional traders closed 4 thousand buy-contracts and 2.3 thousand sell-contracts during the reporting week. Thus, the net position of the most important group of traders decreased by 2.3 thousand. This means that the mood of major players has become more "bearish". But it is best to pay attention to the first indicator now to understand what is happening with the mood of non-profit traders. The green line (as well as the red one) constantly changes the direction of movement: up and down. This indicates the lack of a clear and firm attitude of the "Non-commercial" group. Thus, now it is impossible to draw any conclusions at all. The pound has continued to grow for almost three months (and this is only the last round of its upward movement), but COT reports do not say that at this time the mood among non-profit traders became more "bullish". Or even that any group of traders at this time actively increased purchases of the pound.

The fundamental background for the GBP/USD pair remained unchanged. During the week, the parties continued to negotiate a trade agreement, but came to nothing, there was no progress. Thus, today another deadline expires, which this time was already set by the European Union, and which also has no meaning. Recall that these deadlines were a huge number. But the Minister for European Affairs of France, Clement Bon, generally said that Brexit negotiations are likely to continue after Sunday. That is, this is exactly what we have talked about repeatedly. The negotiations will continue for as long as necessary. MEPS have previously said they could vote for the deal on December 28 if the terms of the agreement are agreed before midnight on December 20. At the time of writing, there was no news of a consensus being reached. Thus, trade negotiations may continue next week. We continue to wait for the parties to officially and publicly declare that the negotiations will be extended to 2021, or when they will officially put an end to the negotiations since it is not possible to reach an agreement. Recall that the European Parliament and the British Parliament still need to have time to read the text of the agreement (several hundred pages) and only then vote. There was no time for all this on November 15, and it is already December 20. Thus, from our point of view, the probability that the parties will have time before the New Year is negligible. This is what Boris Johnson and Ursula von der Leyen regularly state.

Trading plan for the week of December 21-December 25:

1) The price resumed its upward movement without any problems and worked out the first resistance level of 1.3526. Thus, in the 24-hour timeframe, the next target for an upward movement is the level of 1.3734. We recommend that you continue to consider options for opening long positions on lower timeframes and do not try to guess the end of the upward trend.

2) Sellers are still quite weak. Last week, the bears tried to seize the initiative, but it all failed. Thus, for the possibility of opening short positions, it is now recommended to wait again, at least, for the price to consolidate below the critical line. If this condition is met, a downward trend may form in the 4-hour timeframe.

Explanation of the illustrations:

Price levels of support and resistance (resistance/support) – target levels when opening purchases or sales. You can place Take Profit levels near them.

Ichimoku indicators, Bollinger Bands, MACD.

Support and resistance areas – areas from which the price has repeatedly bounced.

Indicator 1 on the COT charts – the net position size of each category of traders.

Indicator 2 on the cot charts – the net position size for the "non-commercial" group.

The material has been provided by InstaForex Company -