Analysis of GBP/USD, 5-minute chart
The GBP/USD pair sharply resumed its uptrend on Wednesday, which, by the way, has not ended, unlike the euro's trend. So, from a technical point of view, the pound could continue moving up, though till yesterday we did not see enough reasons for its further growth. Nevertheless, we should admit that there are more factors that speak in favor of the pound's growth, than similar ones for the euro. And yesterday we also found out that the Supreme Court of Great Britain rejected Scotland's request to grant it the official opportunity to hold a referendum, which would likely be won by those who favor secession from the kingdom. Thus, there will be no referendum (at least not a legitimate one), which means there will be no "internal Brexit" in Britain any time soon either. This is certainly very good news for the pound. The other data were so controversial that it could not force the pound to rise by 200 points. Indexes of business activity in the USA were weak, but UK data was not so good either. The US dollar had more chances to rise, because other reports were better than the forecasts, but, as we can see, the dollar did not get the chance to rise.
Speaking of the situation with technical signals, it was almost ideal. There were two buy signals at the European trading session, afterwards the pound rose. After the second signal, the price surpassed levels like 1.1974 and 1.2007, but there was no sell signal. Therefore, the long position had to be closed manually in the late afternoon. You could earn at least 150 points. The first position was closed by Stop Loss at breakeven.
The latest Commitment of Traders (COT) report on GBP logged a slight decrease in bearish sentiment. In the given period, the non-commercial group closed 1,900 long positions and 11,500 short positions. Thus, the net position of non-commercial traders increased by 3,000, which is very small for the pound. The net position is gradually growing during the last months, but the sentiment of the big players is still bearish. The pound has been rising in recent weeks, but so far it does not seem that it is preparing for a long-term uptrend. And, if we remember the euro's situation, then based on the COT reports, we can hardly expect a surge in price. The demand for the US currency remains very high, and the market, as it seems, is just waiting for new geopolitical shocks so it can return to buying the dollar. The non-commercial group now has a total of 67,000 shorts and 34,000 longs opened. As we can see, there is a wide gap between them. As it turns out the euro is now unable to show growth when market sentiment is bullish. When it comes to the total number of long and short positions, here bulls have an advantage of 17,000. Still, this is not enough for the sterling to increase. Anyway, we are still skeptical about the pound's long-term growth although the technical picture shows otherwise.
Analysis of GBP/USD, 1-hour chart
On the one-hour chart, the price was briefly inside the 1.1760-1.1974 horizontal channel. The uptrend was restored since the pound received good news from the UK. The euro probably rose due to this event as well, which means that the pound has simply pulled the euro along with it. On Thursday, the pair may trade at the following levels: 1.1486, 1.1645, 1.1760, 1.1874, 1.1974-1.2007, 1.2106, 1.2185, 1.2259. The Senkou Span B (1.1680) and Kijun Sen (1.1921) lines may also generate signals. Pullbacks and breakouts through these lines may produce signals as well. A Stop Loss order should be set at the breakeven point after the price passes 20 pips in the right direction. Ichimoku indicator lines may move during the day, which should be taken into account when determining trading signals. In addition, the chart does illustrate support and resistance levels, which could be used to lock in profits. There are no important events or reports for Thursday in the UK and the USA. Therefore, traders will have nothing to react to. Nevertheless, there could still be a trend and volatile movement may still persist since the price broke out of the horizontal channel and retained the uptrend.
What we see on the trading charts:
Price levels of support and resistance are thick red lines, near which the movement may end. They do not provide trading signals.
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, moved to the one-hour chart from the 4-hour one. They are strong lines.
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts reflects the net position size of each category of traders.
Indicator 2 on the COT charts reflects the net position size for the non-commercial group.