GBP/USD 5M
The GBP/USD pair traded very calmly on Monday for most of the day. Thus, the movements were very similar to the movements of the euro/dollar pair. However, if at least a few signals were formed for the euro/dollar pair, then there were none for the pound/dollar. No major fundamental or macroeconomic events in the UK during the day. The quotes of the British currency went up about 50 points only in the US session. We do not even consider all the succeeding movements, since they occurred in the evening, and it is not recommended to open deals at the end of the US session: there is too little time left to accompany them. So, there wasn't much to describe on Monday. The upward trend continues, and the price has returned to 3-year highs, which are located near the level of 1.4240. Most likely, sooner or later this level will be overcome. We remind you that most of the global factors suggest that the pound will continue to rise in price. We describe the reasons in more detail in our fundamental articles.
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GBP/USD 1H
The British pound continues to be in the horizontal channel of 1.4100-1.4220 on the hourly timeframe. And it is clearly visible. The price came as close as possible to the upper limit of the channel on Monday and, most likely, it will try to settle in the area above it this week. But in general, the pair continues to "swing" in the horizontal channel. Therefore, a new round of downward movement to the level of 1.4101 may begin on Tuesday, but it should be understood that the price inside the flat can move absolutely randomly. The pound continues to remain in close proximity to its 3-year highs, so today it may be possible to overcome these price values. The pair will not trade along them forever. We continue to draw your attention to the most important levels, of which there are very few at the moment, and trade from them: 1.4080, 1.4101, 1.4219 and 1.4240. The Senkou Span B (1.4118) and Kijun-sen (1.4154) lines can also be sources of signals, but they are very weak in the flat. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction of 20 points. The lines of the Ichimoku indicator can move throughout the day, which should be taken into account when searching for trading signals. The macroeconomic background will be clearly more interesting on Tuesday. The index of business activity in the manufacturing sector for May will be known in the UK, and there will also be a speech by the Chairman of the Bank of England, Andrew Bailey. We believe that this is the most important event of the day for the pound/dollar pair. In the United States, you can pay attention to the index of business activity in the manufacturing sector ISM, but the chances of its working out are less.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
The GBP/USD pair increased by 10 points during the last reporting week (May 18-24). However, in general, the pound continues to rise in price, which is clearly visible on any long-term timeframe. Major market players continue to generally increase long positions, which provides an additional incentive to the British currency. The group of "non-commercial" traders (the most important group) opened only 936 Buy contracts (longs), but at the same time closed 4,700 Sell contracts (shorts) in the reporting week. And so the net position increased again, by more than 5,000 contracts, which means much more for the pound than for the euro. The mood of professional traders has again become a little more bullish, but in the medium term, it is absolutely impossible to say that large players are constantly increasing longs or closing shorts. The second indicator in the chart above, which shows the change in the net position for a group of "non-commercial" traders, shows that big players started to actively built up longs around February, but by mid-March their number began to decline, and has been approximately at the same level since the beginning of April. Thus, the pound continues to rise in price completely out of proportion to the bullish mood of non-commercial traders. Therefore, we continue to believe that the pair is much more influenced by the fact that hundreds of billions and trillions of dollars are infused into the US economy than the actions of major market players. However, most likely, the effect of these two factors is multiplied by each other, which leads to an even stronger result. In our case, the pound continues to grow when it should have fallen to the 30 figure, if the fundamental background from the UK was even slightly taken into account.
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.
The material has been provided by InstaForex Company - www.instaforex.com