The GBP / USD currency pair continues to suffer in attempts to correct against the uptrend, which totaled 2800 points in total. The couple has been suffering since February 24, that is, for almost two months. The fact that the British currency cannot fall in price with a completely disastrous fundamental background from the UK itself speaks perfectly to the external factors that affect the exchange rate formation. In particular, as we said earlier, this is a “speculative factor” and a factor of flooding the American economy with dollars. Thus, the pound sterling is in a paradoxical situation, when all the fundamental factors speak in favor of its fall, but it continues to remain very high and remains strongly overbought. On the 24-hour timeframe, the quotes of the pair with grief were fixed in half below the Ichimoku cloud and the critical line. However, the overall strength of the movement casts doubt on the further drop in quotations. We, as in the case of the euro, expect a resumption of growth in the pound quotes, at least based on the factor of trillions of dollars poured into the US economy. Well, if the “speculative” factor “helps”, then the pound sterling in 2021 will be able to continue to break records of its value while the UK economy breaks records of its decline and contraction after three “lockdowns” and Brexit. In principle, the pair is very close to both the Ichimoku cloud and the Kijun-sen line. Therefore, as early as next week, these obstacles may be overcome and the uptrend resumed.
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 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.
Industrial production and GDP reports were released in the UK this week. The former rose 1.0% on a monthly basis, the latter rose 0.4% on a monthly basis. In general, this data cannot be called either strong or weak. GDP in general was published this time not in the classical dimension (quarterly), so it is difficult to understand what will happen at the end of the first quarter. Although we expect its new reduction. Traders did not pay much attention to the macroeconomic statistics from Foggy Albion, and in the States they did not ignore only the inflation report. In principle, the rest of the fundamental background did not arouse any interests at all among traders. They are clearly not interested in the rate of vaccination, the rate of economic growth, all the British geopolitical problems, and so on. Now traders are interested in the pound sterling as a way to make money (a speculative factor), and the inflated money supply in the US generally has nothing to do with traders, although it is due to it that the US dollar is getting cheaper and may continue to do so in 2021.
Trading plan for the week of April 19 – 23:
1) The pound / dollar pair is trying with all its might to continue the downward movement. Thus, it will be possible to resume upward trading on the 24-hour timeframe no earlier than the price fixing above the Kijun-sen and Senkou Span B lines. We believe that the pair has much more chances of resuming the upward movement. The “unwillingness” of the pair to fall in price is visible to the naked eye.
2) Sellers have been trying to push the pair down to any serious value for almost two months now. However, they do little. So far, given the location of the price below the Kijun-sen and Senkou Span B lines, the chances for the downward movement to continue are preserved. However, the markets do not pay attention to the “foundation”, so the pound sterling does not fall. Well, the States continue to inflate the money supply, so the US dollar continues to fall in price in the long term.
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.
Indicators Ichimoku, Bollinger Bands, MACD.
Support and resistance areas are areas from which the price has repeatedly bounced off.
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.