The GBP / USD currency pair on Thursday, April 22, also continued to correct and also traded quite actively. Quotes of the British pound began to fall during the European trading session, and in any case, the ECB meeting and its results had nothing to do with the pound / dollar pair. Thus, the sale of the pound sterling continued for technical reasons. We warned traders that the pair, instead of starting a new uptrend, may remain in the swing mode, which is most clearly visible on the 4-hour timeframe. It seems that it is this option that is being implemented in the end. As part of the last round of the upward movement, the price went up by about 340 points. Over the past couple of days – 180 points down. We will not be surprised if the downward movement continues, despite the uptrend line on the hourly timeframe, which has already been broken once. On the 5-minute timeframe, the resumption of the downward movement on April 22 is clearly visible. In the middle of the European session, a new drop in quotations began, and after a while, signals began to form. The first – overcoming the extremum level of 1.3914 – for the sale was on the verge of becoming false, because the level of 1.3891 was worked out, a rebound was made from it, and the price returned to the level of 1.3914. However, Stop Loss was not placed (the price did not go down 20 points), and the pair failed to gain a foothold above the level of 1.3914. Therefore, the sell deal should have been left open, and later the price worked out the Kijun-sen line, from which it initially bounced. The short position ended up making a profit of 40 pips. Then a buy signal was formed – a rebound from the critical line – and this signal turned out to be false. A little later, the price consolidated below Kijun-sen and the loss amounted to 15 points. There was no need to open new sell deals to overcome the Kijun-sen line, since the nearest target – the extremum level of 1.3846 – was too close and the price could rebound from it. There was no rebound, but there was no further downward movement either. In any case, even if traders opened shorts, the Stop Loss level should have been set at breakeven, since the price went down 20 points after the formation of a sell signal. Thus, there should definitely not be a loss on this trade. As a result, traders could have earned about 25 pips during the previous day.
On the hourly timeframe, the technical picture still requires no explanation. The uptrend is maintained by a weak uptrend line, so a rebound from it could trigger a renewed upward movement. Unfortunately, the pound sterling continues to move in the “swing” mode, which is clearly seen on the 4-hour timeframe. Therefore, in spite of the fact that we are now expecting a resumption of the upward movement, it is quite possible that the pair may now collapse downward by the same 300 points that it had previously gone up. Therefore, trading from levels and lines remains a very important aspect. When rebounds from them and overcomes, signals will be generated. The most important levels today are 1.3952, 1.3914, 1.3886 and 1.3846. The Kijun-sen line (1.3879) is also important, signals can also form around it. 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). On Friday, April 22, the UK is slated to publish service and manufacturing PMIs, as well as a March retail sales report. In the states, the indices of business activity in the services and manufacturing sectors will become known, and a speech by US Treasury Secretary Janet Yellen will take place. Thus, the news calendar for today is quite abundant.
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. And 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 have grown 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 – Ichimoku indicator lines 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.