The GBP/USD pair moved very actively on July 27 and allowed traders to earn very good money. But before we start analyzing trade deals, I would like to remind you that we continue to consider the option of the pound's long-term growth as the main one. We have repeatedly discussed the reasons for this in our fundamental articles. It should also be noted that no macroeconomic statistics were published in the UK yesterday, and there were only two far from the most significant reports in America, the release time of which is marked in the chart with the numbers "1" and "2". Taking into account the fact that the second report in its value practically did not differ from the previous month, it could not in any way provoke a strong appreciation of the British pound, which we observed during the US trading session. As for the first report, there was no reaction to it, which is clearly seen in the chart . Thus, once again we note that there was no reaction to macroeconomics. Nevertheless, the pound has risen again and has grown quite strongly. Now let's start analyzing the trading signals. There were three of them during the past day. The first is when the price settles below the extreme level of 1.3800. This signal turned out to be false, as the price failed to reach the nearest target level of 1.3754. However, the price managed to go down 20 points before turning up, so the Stop Loss should have been set to zero and the traders did not receive a loss on a short position. The next signal was formed on a breakthrough of the 1.3800 level from the bottom up at the beginning of the US trading session. This signal turned out to be much stronger, and after its formation, the price overcame the resistance level of 1.3830 and the extreme level of 1.3859, going up a total of about 80 points until the moment when the transaction had to be manually closed, as the time was approaching evening. Thus, the second trade transaction managed to make a profit of about 70 points, which is an excellent result.
The pound/dollar retreated on the hourly timeframe, after which a powerful spurt to the upside. The price also managed to overcome the trend line, but this did not affect the overall upward trend in any way. We remind you that in recent months, the pound/dollar pair continues to move as erratically as possible, trend lines and channels are formed quite rarely and, as a rule, do not provide any help to traders. Nevertheless, the pound is rising again, which is fully in line with our expectations. In technical terms, we continue to draw your attention to the most important levels and recommend trading from them: 1.3800, 1.3859, 1.3898, 1.4000. The Senkou Span B (1.3740) and Kijun-sen (1.3708) lines can also be sources of signals. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when searching for trading signals. No important reports will be published in the UK on Wednesday, so all the attention of the markets will be completely focused on the evening summary of the Federal Reserve meeting. At this time, the pound/dollar pair, unlike the euro/dollar pair, continues to trade very actively, so the volatility may increase even more tonight.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
The GBP/USD pair fell by 200 points during the last reporting week (July 13-19). The data from the latest Commitment of Traders (COT) reports fully support this development: the net position of non-commercial traders is falling, and the pound is also dropping. Thus, everything seems to be logical. However, the first indicator in the chart clearly shows that the upward trend is not ending, but that a new downward trend is about to begin. The green and red lines crossed, which already means a bearish mood of traders. Let us remind you that the green line is the net position of the "non-commercial" group, and the red line is the net position of the "commercial" group. Consequently, at this time, professional players have already opened a larger number of contracts for selling (short) than for buying (longs). And this suggests that major players believe in the further fall of the British currency. But here the same factor also works as for the euro/dollar pair. Trillions of dollars continue to flow into the American economy, which is why its rapid recovery is achieved. However, at the same time, the money supply is growing, inflation is rising, which depreciates the dollar much faster than the sales of the major players of the pound. Consequently, we are fully justified in expecting that the pound will also start to rise in price again, simply because inflating money supply in the United States is more global. During the reporting week, major players immediately opened 11,600 contracts for sale and closed 1,100 contracts for buy. Their net position decreased immediately by 12.7 thousand. Now they already have more open sell positions than buy ones. However, on all these actions of large players, the pound barely managed to get to the last local low, which was formed even when the mood of traders was bullish.
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.