The GBP / USD currency pair on Friday, April 30, also fell down, like the European currency. However, if in a longer term than the hourly timeframe, the euro simply began to correct, then the pound sterling continues to move in the swing mode and Friday’s downward movement is their next round. However, on the 1-hour timeframe, we are not very interested in what is happening on the 4-hour timeframe. It is just important to understand that the pound now likes to change its direction of movement every 7-10 days. On Friday, the pair’s quotes began to fall immediately in the European trading session. Moreover, if important reports were published in Europe at that time, then in Great Britain there were no publications. Thus, we can make an unambiguous conclusion that it was not the statistics from the Eurozone that caused the fall of the Euro currency on Friday. The overcoming of the 1.3945 extremum level began a little later than the opening of the European trading session, so the sell signal was formed earlier. But, fortunately for traders, the price returned to the 1.3945 level and bounced off it, forming a sell signal, which should have been worked out. Thus, traders had to open short positions here with the target of the Kijun-sen line, which was soon worked out. This trade brought 28 pips in profit. A rebound followed from the critical line and, unfortunately, this was already a false buy signal, since the pair did not continue the upward movement after its formation. But at the beginning of the American session, the drop in quotations resumed. And it resumed as unsuccessfully as possible for traders. The price of one five-minute candlestick went down 16 points, and it was this candlestick that became a signal for new sales, thus bringing the maximum loss on a long position – 26 points. But, on the other hand, a sell signal was immediately formed, because the price crossed the critical line, and after 5 minutes, the extremum level 1.3886. Thus, traders had to open new short positions with the target of the Senkou Span B line. The trade brought about 20 more pips in profit. Here again the formation of a false signal followed, as there was a rebound from the Senkou Span B line. Result: a buy trade and a loss of 13 points. However, it did not end there either, because the price again generates a sell signal in the form of overcoming the Senkou Span B line, and then immediately overcomes the extremum level of 1.3835. A new short position brings another 28 pips of profit and a new buy signal is immediately formed, as there is a clear rebound from the level of 1.3807. The pair rallies to 1.3835 – another 21 profit pips – and bounces off it, forming another sell signal, and then falls back to 1.3807, bringing another 21 profit pips. As a result, despite 2 false signals, traders on Friday could earn a very decent amount.
On the hourly timeframe, the collapse of quotations is also visible to the naked eye. The price has broken the important lines of the Ichimoku indicator, but there is still no trend now, since the pair had broken the ascending trend line earlier, and the descending line cannot be drawn at this time. In general, the trend remains uncertain, which is somewhat confusing. On Monday, the upward rollback is likely to follow, but in any case, any movement can be “caught” on the 5-minute timeframe. We believe that this week the pair can calmly go down another 100-120 points within the swing from the 4-hour timeframe. We will continue to pay attention on Monday to the most important levels and lines: 1.3724, 1.3807, 1.3835 and 1.3886, as well as the Kijun-sen (1.3904), Senkou Span B (1.3850) lines. It is recommended to set the Stop Loss level at breakeven when the price passes in the right direction by 20 points. The closest level / line should always be used as targets (exceptions – if the target is too close to the signal). On Monday, May 3, no major events are scheduled in the UK again, and in the US, only the ISM Manufacturing PMI will be published.
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 20 – 26), the GBP / USD pair fell by 90 points. The last few COT reports have shown that the mood among professional players is again becoming more “bullish”, but in general they themselves do not know what to do with the pound sterling in the past year. Look at the first indicator in the illustration below the chart. The green line is the net position of the “Non-commercial” group of traders. It constantly changes the direction of movement, intersects with the red line (net position of the “Commercial” group). In general, it is now impossible to predict the further movement of the pair based on COT reports. From October to March, the pound sterling rose in value against the dollar, although the green and red lines at that time showed no trend. During the reporting week, major players closed 1.1 thousand buy contracts and got rid of 5 thousand sell contracts. Thus, their net position increased by 3.9 thousand contracts, and the mood again became more “bullish”. In general, it also remains “bullish”, since the total number of buy contracts from professional players exceeds the total number of sell contracts by 2 times. Thus, of course, we can expect further growth in the British pound quotes, but we still believe that the swing will continue at this time. Too many conflicting factors are at the disposal of the markets. Constant changes in the direction of movement of the green line indicate that large players in the long term do not themselves know what to do with the 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.