The GBP / USD currency pair on Tuesday, April 27, continued to trade in the same mode as on Monday. We warned in yesterday’s article that the pair is likely to continue unworked moves, so it might be better not to trade it for a few days. Basically, this advice was very helpful, as shown by the movements on the second trading day of the week. Despite the fact that as many as three strong and accurate signals were formed on the 5-minute timeframe during the day, it would still not have been possible to make money on them, since the volatility was about 60 points. It seems to be not a little, but not a lot either. Nevertheless, let’s try to deal with trading signals and deals that should and should not have been opened. In principle, it is clearly not worth carrying out a long analysis. Already at the beginning of the European session, it became clear that the “swing” would continue. The price began to “dance” around the extremum level of 1.3886, which would have led to the formation of false signals, if not for our yesterday’s warning. First, the price fixed below the level of 1.3886, then higher, then lower again. And all this within an hour. Therefore, when the third overcoming of the level took place, it became clear that it was not worth opening deals in the near future. Further, a signal was generated to overcome the level of 1.3886 from the bottom up. From our point of view, it should not have been worked out either, after the morning “dancing” around the level of 1.3886. The price rose after it by “as much” 20 points and worked out the Kijun-sen line, from which it rebounded quite clearly. At least there were no attempts to gain a foothold above this line. This sell signal could be worked out, since the critical line during the day was not noticed in something “illegal”. True, the price went down again by an absolute minuscule, about 12 points, so traders could close the deal near the level of 1.3886, earn those unfortunate 12 points, level the losses on the EUR / USD pair and leave the market. For obvious reasons, it was not necessary to work out a buy signal upon a rebound from the level of 1.3886. Moreover, the price rose again to the critical line, which was located nearby. During the day, not a single important macroeconomic report was published in either the UK or the US.
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 new round of a weak upward movement. Unfortunately, the pound sterling continues to move in a “swing” mode on almost all timeframes, starting from 4-hour and down. Therefore, despite the fact that according to the “technique” we can now expect the resumption of the upward trend, it is quite possible that the pair will continue to move down another 150 points, breaking the trend line. On Monday, the level of 1.3886 was overcome several times, on Tuesday the price falsely crossed the trend line, after which it nevertheless began a new round of upward movement. In general, now the “technique” also generates false signals, and in general the situation is very unfavorable and threatens with losses. Will pay attention on Wednesday to the most important levels and lines: 1.3945, 1.3835 and Kijun-sen (1.3915), Senkou Span B (1.3839) and the trend line. However, even near them there is no guarantee that a strong signal will be generated. For example, it is definitely not worth working out such a signal as it was formed yesterday when rebounding from a trend line. 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 Wednesday, April 28, no important events are planned in the UK, while the results of the two-day Fed meeting will be announced in the United States, as well as a press conference with Jerome Powell. Also, not the worst decision would be not to enter the market for the pound / dollar pair for several days.
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 the 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 on the basis of 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’s rate is the factor of the injection of trillions of dollars into the American economy, and not 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 too bright prospects.
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.