GBP/USD 5M

The GBP/USD currency pair managed to fall in price by only 275 points on Tuesday... We are talking about moving from the high to the low of the day. Still, at the beginning and at the end of the day, the pair corrected slightly, so the losses turned out to be slightly less. However, once again we draw your attention to the fact that the pound is falling into the abyss at the speed of free fall. What was the news yesterday? The UK published a report on unemployment in the morning, which rose by 0.1%, as well as a report on wages, which turned out to be slightly lower than expected. And the pound is getting cheaper in half a day by almost 3 cents against the dollar on such data?!?!?! From our point of view, this is absurd, and the whole point is not at all in the weak statistics from Great Britain. Of course, it also had a certain destructive effect, but the main reason does not lie in it. We believe that the market continues to look towards the sell-off of the British currency. Because of the geopolitical conflict in Eastern Europe and its consequences for the whole of Europe and the whole world, because of the dollar's status as a "reserve currency", because of the weaker position of the Bank of England compared to the Federal Reserve. In the end, due to technical reasons, since the 2-year downtrend is still in place.

It was possible to earn a lot on such a strong movement as yesterday. Unfortunately, the pair formed a false signal every time before forming a strong signal. It overcame two important extreme levels. In the first case, it first bounced twice from the level of 1.2163, and then overcame it. In the second case - the same with the level of 1.2073. Therefore, traders could open long positions first, then they had to close them and open short positions. In the first case, Stop Loss worked at breakeven (on a long position), in the second case, it didn't. Thus, we have four trades, one of which is at a loss (30 points), one is at zero and two are at a profit of about 130 points. In any case, it turned out very well.

COT report:

The latest Commitment of Traders (COT) report on the British pound showed insignificant changes. The non-commercial group opened 3,800 long positions and 500 shorts during the week. Thus, the net position of non-commercial traders increased by 3,300. However, the mood of major players still remains "pronounced bearish". And the pound, despite the growth of the net position, still resumed the fall. The net position has been falling for three months, which is perfectly visualized by the green line of the first indicator in the chart above or the histogram of the second indicator. Therefore, two increases in this indicator are unlikely to unambiguously indicate the end of the downward trend for the pound. The non-commercial group has a total of 105,000 shorts open and only 34,000 longs. Thus, the difference between these numbers is more than three times. We note that in the pound's case, the COT report data very accurately reflects what is happening in the market: the mood of traders is "very bearish", and the pound has been falling against the US dollar for a long time. In the past few weeks, the pound has shown growth, but even in the chart for this paragraph (daily timeframe), this movement looks very weak. Since in the pound's case, the COT report data reflects the real picture of things, we note that a strong divergence of the red and green lines of the first indicator often means the end of the trend. Therefore, now we can formally count on a new upward trend. However, weak geopolitical, fundamental and macroeconomic backgrounds for European currencies still put pressure on these currencies.

We recommend to familiarize yourself with:

Forecast and trading signals for EUR/USD on June 15. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

No comments are particularly needed on the hourly timeframe. The British currency continues to practically free fall, and no one knows what will happen today and tomorrow, when the results of the meetings of the Bank of England and the Fed are announced. Logically, the market has already played out the worst scenario, so we would assume that the pound will rise on Wednesday and Thursday. But in reality, the market's reaction can be almost anything. Today, we highlight the following important levels: 1.1932, 1.2106, 1.2259, 1.2429, 1.2458, 1.2589. Senkou Span B (1.2548) and Kijun-sen (1.2244) lines can also be sources of signals. Signals can be "rebounds" and "breakthrough" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. Nothing interesting is scheduled for Wednesday in the UK, while the US retail sales report will be published. However, the market has already completely focused on the results of the Fed meeting, so everyone is focused on this event and Fed Chairman Jerome Powell's speech.

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.