The GBP / USD currency pair on Monday, April 19, also started a new strong upward movement, which probably no one expected. We have warned more than once that the pound sterling continues to be influenced not only by the factor of the strongest flooding of the US economy with dollars, but also by the “speculative” factor, which also supports the British currency. Actually, on Monday what should have happened – the depreciation of the US dollar continued. During the day, more signals were generated than for the euro / dollar pair, and they managed to earn more on them, which pleases. The first signal was formed at the beginning of the European trading session – overcoming the extremum level of 1.3846. The price consolidated above this level, stomped around it for about 2 hours, without making any attempt to gain a foothold below it, and resumed its upward movement, having worked out the nearest target level – 1.3914. This buy trade earned traders 56 pips. This level was then overcome, so buy trades could be left open with the next target – the extremum level of 1.3952, but this level was immediately overcome, so the final target was the level of 1.3998. As a result, traders could earn up to 120 pips on yesterday’s upward movement. It should also be noted that no macroeconomic statistics were released yesterday, as well as no important news. Considering that the dollar collapsed simultaneously against the euro and the pound, the reason was precisely in the dollar, and not in European currencies.
On the hourly timeframe, the technical picture does not require any explanation at all. There is a clear upward movement, and yesterday there was a strong increase. The price has already overcome 2 of 3 resistance levels on Monday, only the 1.4062 level remains at the top. The bulls may have problems breaking the 1.3998 level, which practically coincides with the 1.4000 psychological level. On the other hand, if it is overcome, then the chances of further movement to the North will increase even more. As you can see, now traders do not need local recharge in the form of statistics or “foundation” in order to continue to buy the pair. Two factors, which we have repeatedly voiced, are quite enough that the US currency continued to decline. Unemployment, wages and jobless claims are due in the UK on Tuesday. However, we believe that these reports will not have any impact on the movement of the pound / dollar pair. Trading from levels and lines remains a very important aspect. When bouncing from them and overcoming, signals will be generated. The most important levels today are 1.4080, 1.3998 and 1.3914. Senkou Span B (1.3794) and Kijun-sen (1.3841) lines are also important, and signals can also form around them. As before, it is recommended to set the Stop Loss level at breakeven when the price passes 20 points in the right direction. The nearest level / line is always used as targets (exceptions – if the target is too close to the signal).
We also recommend that you familiarize yourself with the forecast and trading signals for the EUR / USD pair.
Recall that during the last reporting week (April 6-12), the GBP / USD pair fell by 160 points. The illustration above clearly shows how “strong” the current downward correction is! Recall that over the past 6-8 weeks, professional traders have been actively cutting both buy and sell orders. If on February 23 the first were opened 69 thousand, and the second – 34 thousand, then as of April 6, 44 thousand Buy-contracts were opened, and Sell – 25.7 thousand. Thus, overall, the ratio between purchases and sales has not changed. Only the number of contracts opened by the “Non-commercial” group has changed. Hence the conclusion: “bullish” mood remains among professional traders, but in general, fewer and fewer speculators want to deal with the “unbalanced” pound sterling. Basically, the behavior of non-commercial traders is well illustrated by the indicators below the main chart. The first, which displays the change in net positions of the three categories of traders, shows a constant change in direction, constant line crossings. This is all despite the fact that there has been a steady upward trend in the last 12-13 months, which is beyond doubt. It turns out that there is a trend and it is strong, but the most important category of traders does not buy the pound sterling with huge deals. Moreover, the second indicator shows that non-commercial traders have been increasing their purchases and then increasing sales in the last six months. That is, there was no clear “bullish” mood. This only proves once again the fact that the pound and the euro grew in the last year on the factor of the increase in the money supply in the United States. That is, large players traded in accordance with their interests and goals, but their deals were blocked by the injection of trillions of dollars into the US economy. Well, in the reporting week, non-commercial traders began to reopen purchase contracts, in the amount of 7.2 thousand. Fewer than a thousand sales contracts were opened. It seems that the big players are again beginning to believe in the growth of the “bitcoin” pound sterling.
Explanations for illustrations:
Price levels of support and resistance (resistance / support) – levels that are targets when opening purchases or sales. You can place Take Profit levels near them.
Kijun-sen and Senkou Span B lines – the lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour timeframe.
Support and resistance areas are areas from which the price has repeatedly bounced off.
Yellow lines – 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.