The GBP / USD currency pair was trading in different directions on Friday, April 23rd. On the hourly timeframe, it can be seen that the upward trend is formally preserved due to the trend line, however, in fact, the pair may now continue to move down another 150 points due to the persisting “swing” mode. On Friday, at the European trading session, the bulls made an attempt to start a new upward movement, but very quickly their attempts broke down at the level of 1.3891, and the pair went flat. The bears also failed to build on the success of the previous days during the day. Macroeconomic statistics during the day had practically no effect on the movement of the pair. The numbers “1”, “2”, “3”, “4” mark the time of release of reports on retail sales, business activity in the UK, business activity in the US and Janet Yellen’s speech. As you can see, none of these events led to serious price changes. Now let’s move on to signals. Of course, you shouldn’t have traded during the flat in the European trading session. There could be problems with identifying the flat itself, since it is far from immediately possible to understand that a flat has begun, especially when it comes to intraday trading. Therefore, traders could open two deals from the Kijun-sen line, which would be unprofitable. More precisely, one deal, to sell, when the price fixed below the critical line, since the buy signal immediately rested on the level of 1.3891, which is located nearby and which buyers could not overcome. The loss could be about 17 points. There was no need to trade further from the Kijun-sen line. Already during the American session, there was a rebound from the extremum level of 1.3846, which should have been interpreted as a buy signal, but, unfortunately, it turned out to be false too. Another 13 points of loss. The next rebound from the level of 1.3846 was very fuzzy, however, after its formation, the price finally began to move in a normal way and allowed traders to earn some money, since the Kijun-sen line was subsequently worked out, so the signal brought a profit around 23 points, which partially covered the losses on the first two deals.
On the hourly timeframe, the technical picture still requires no explanation. The uptrend is maintained thanks to a weak uptrend line, and a rebound from it triggered a small 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 according to the “technique” we can now expect the resumption of the upward movement, it is quite possible that the pair will continue to move down another 150 points, breaking the trend line. 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 1.3807, 1.3835, 1.3886 and 1.3945. The Kijun-sen (1.3915) and Senkou Span B (1.3839) lines are also important – 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). There are no major events scheduled for Monday 26 April in the UK, and only a report on durable goods orders in the US, which could theoretically trigger a market reaction.
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 13-19), the GBP / USD pair rose by 200 points. As for the COT report, the latest report showed no significant changes in the balance between buy and sell contracts for a group of non-commercial traders. During the reporting week, non-commercial traders opened 10.5 thousand Buy-positions and 8.2 thousand Sell-positions. Thus, their net position increased slightly, by 2.3 thousand contracts, and the mood became a little more “bullish”. However, these are not changes from which new conclusions can be drawn. In general, the uptrend for the pound remains, and this is the most important thing. As in the case of the European currency, the COT reports now do not signal at all that the upward trend is maintained, and the key influence on the pair rate is exerted by the factor of the injection of trillions of dollars into the American economy, and not by the behavior of large players. If you look at the first indicator, you can see how the red and green lines often crossed, which indicates the lack of a clear idea of which direction to trade the pound in general! Now the green and red lines have moved away from each other, which formally means an uptrend. Therefore, based only on the COT reports, we can also assume further upward movement. However, we have already said that it will be very difficult for the pound to grow from a purely technical point of view, since this growth is already completely unreasonable. Although another couple of trillion dollars in the US economy – and even the pound sterling will be able to continue strengthening, despite the problems with the Northern Ireland Protocol, despite the Scottish question, despite the weak recovery and a possible drop in GDP in the first quarter, despite the general decline economy due to Brexit and not very bright prospects.
Explanations for illustrations:
Price levels of support and resistance (resistance / support) – levels that are targets when opening purchases or sales. Take Profit levels can be placed 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.