GBP/USD 5M
The GBP/USD pair moved very well again on October 4. More than 100 points were passed during the day, which is an excellent result for an "empty" Monday. Moreover, there was a one-way movement for most of the trading day, which is very good for traders. Markets continue to retrace very quickly from the shock last week caused by the UK fuel crisis. As we expected, the British currency was unable to continue falling, but it has almost completely recovered after losing 300 points last week. There were no important macroeconomic reports in the UK yesterday, as well as in the US. Thus, the entire 100-point move was purely technical. Now let's look at the trading signals, of which there were also three for the pound/dollar pair. The first was formed during the European trading session, when the price broke the Kijun-sen line. This is the place where the pound should be bought. Subsequently, the price reached and overcame the levels of 1.3601 and 1.3607 and continued to rise. Unfortunately, no targets were located above these levels, and when the upward movement ended, it was not possible to catch this downward reversal. As a result, the quotes dropped back to the level of 1.3607, where a long position should have been closed. The profit on it was about 27 points. The last third signal should not have been processed any more, as it had formed in the evening. Thus, despite the fact that yesterday was not the best day, traders managed to earn money thanks to our recommendations.
GBP/USD 1H
The pound/dollar pair continues an upward correction on the hourly timeframe, which may develop into a full-fledged upward trend. The British currency does not have any special support from the foundation, but the US dollar does not feel any optimism about the fact that the Federal Reserve has not yet announced the curtailment of the QE program. Looking at the longer-term timeframe, it becomes clear that the downward trend is ongoing, but not strong. If we rebuild the last downtrend line, it turns out that the price perfectly reached and bounced off it yesterday. Thus, breaking the trend line may increase the likelihood of further growth in the British currency. We distinguish the following important levels on October 5: 1.3519, 1.3570, 1.3601 - 1.3607, 1.3732. Senkou Span B (1.3679) and Kijun-sen (1.3545) lines can also be signal sources. It is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The Ichimoku indicator lines can move during the day, which should be taken into account when looking for trading signals. The UK is also due to publish the PMI for the services sector on Tuesday, which is also unlikely to interest traders. Thus, the focus will be on the US ISM index. It should also be understood that the pound may continue to rise for no apparent reason as part of the recovery process after the dip last week.
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.
COT report
Major players slightly strengthened their bullish mood during the last reporting week (September 21-27). Although it is now as neutral as possible in fact. The fact is that the value of the net position for the non-commercial group of traders is now around zero, which means equality between the number of open long and short positions in the pound. Consequently, neither bulls nor bears have the initiative. Moreover, in the last couple of months, the mood of professional traders has been constantly changing, as the net position is either increasing or decreasing. Thus, from our point of view, the conclusion is obvious: the COT reports do not indicate either bullish or bearish sentiment now. During the reporting week, changes in the non-commercial group were minimal. 5.5 thousand Buy contracts (longs) and 4.5 thousand Sell contracts (shorts) were opened. Thus, the net position of non-commercial traders increased by 1,000. If in the case of the European currency, the COT reports signal a very likely further fall, then in the case of the pound, the COT reports just indicate the neutral mood of traders. The picture above shows a clear downward trend, but the problem is that professional players do not continue selling the British currency. Consequently, further decline is not evident for the pound. Take note that the euro corrected by about 43% against the upward trend, and the pound - by 24%.
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.
