GBP/USD 5M

The GBP/USD currency pair moved in a very interesting manner on Wednesday. At first, there was a moderate growth, then an almost landslide fall, then no less strong growth and a new fall. The pair's volatility was again more than 100 points, but the pair continues to trade inside the horizontal channel (1.2251-1.2410). Thus, despite strong and good movements, the pair remains inside a highly volatile flat. The US inflation report provoked strong movements during the day, and we said that the market could react strongly, but without a clear advantage for one of the currencies. Basically, that's what happened. There was nothing interesting in the UK yesterday, all the most interesting things are planned for today. At the same time, the pound continues to remain near its 2-year lows, keeping the chances of a resumption of the downward trend at almost any moment. The same problem as the euro/dollar: there are no bulls in the market, so no matter what the factors are now, the pound still remains very low.

Again, no trading signals were formed. During the past day, the pair was approaching the level of 1.2405, but failed to reach it by 6 points. From our point of view, this is a fairly large margin to consider this "shortfall" as a rebound. Therefore, no trading deals should have been opened during the day. Maybe this is for the best, since you can make money on the "swing" only if the pair generates signals at its extremes.

COT report:

The latest Commitment of Traders (COT) report on the British pound has witnessed a new increase in bearish sentiment among professional traders. During the week, the non-commercial group closed 6,900 long positions and 2,700 short positions. Thus, the net position of non-commercial traders decreased by another 4,000. The net position has been falling for 2.5 months already, which is perfectly visualized by the green line of the first indicator in the chart above. The non-commercial group has already opened a total of 107,000 short positions and only 33,500 long positions. Thus, the difference between these numbers is threefold. This means that the mood among professional traders is now "pronounced bearish" and this is another factor that speaks in favor of the continuation of the fall of the British currency. Note that in the pound's case, the data from the COT reports very accurately reflects what is happening in the market. Traders are "strongly bearish" and the pound is also falling strongly against the US dollar. Assume the end of the downward trend, we do not see any reason. COT reports, foundation, geopolitics, macroeconomics, technique, all speak in favor of the fall of the pound and the rise of the dollar. Of course, the fall of the pound/dollar pair cannot continue forever, there must be at least upward corrections, but so far, there is not a single signal about the beginning of one.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. May 12. Christine Lagarde is stubbornly silent about the rate hike.

Overview of the GBP/USD pair. May 12. US inflation has not impressed.

Forecast and trading signals for GBP/USD on May 12. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

You can clearly see on the hourly timeframe that the pound still cannot correct normally and is stuck inside the horizontal channel at 1.2259-1.2410. Now, like the euro, the pair must first leave this channel in order to talk about a new trend movement. Despite the fact that the pound has support factors, they do not play any role for the market yet. We highlight the following important levels on May 12: 1.2259, 1.2405-1.2410, 1.2601, 1.2674. Senkou Span B (1.2525) and Kijun-sen (1.2419) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" 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. The publication of reports on GDP for the first quarter and industrial production for March is scheduled for Thursday in the UK. We believe that the GDP report may provoke a slightly smaller outburst of emotions than yesterday's inflation. If the value of the indicator is very different from the forecast, then the movement can be strong and one-sided. Only minor reports will be published in the US, which are unlikely to attract the market's attention. Therefore, all the most interesting things will happen this morning.

On 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.