GBP/USD 5M

The GBP/USD currency pair continued its upward movement on Monday, although there were no objective reasons for this. During the past day, only two relatively important reports were published. Manufacturing PMI in the US and similar in the UK. The British index rose unexpectedly, but remained below the 50.0 level, so we are surprised that traders positively reacted to this report. The US ISM business activity index turned out to be weaker than forecasts, but remained above 50.0, so we are also surprised by such a strong fall in the dollar in the afternoon. As a result, we come to the conclusion that at this time the market is set to buy the British currency, which, coupled with the strong growth last week, still indicates a very high probability of the end of the downward trend. Moreover, on the 24-hour timeframe the Kijun-sen line has been overcome and now the pair can move with the target of the Senkou Span B line, which lies at the level of 1.1836. Also, the pound has overcome all the lines of the Ichimoku indicator and the downward trend line on the hourly timeframe. Such a movement is what we talked about when we spoke of the signs of the beginning of a new trend.

Unfortunately, yesterday there was also a problem with trading signals for the pound. Most of the daytime, the pair was in an open flat, so the signals were mostly false. Traders also failed to work out the morning spurt upwards, as few people expected an increase of 185 points amid one business activity index, which also turned out to be below the level of 50.0. However, the pound volatility remains very high, and one can expect both high losses and high profits on transactions.

COT report:

The latest Commitment of Traders (COT) report on the British pound was again very eloquent. During the week, the non-commercial group opened 18,500 long positions and 10,100 short positions. Thus, the net position of non-commercial traders increased by another 8,400, which is quite a lot for the pound. We could assume that the actions of the big players and the pound's movement have finally begun to coincide, only the report is released with a three-day delay and simply does not include the last three days of trading, when the pound showed growth. The net position indicator has been actively falling again in recent weeks, and the mood of the big players remains "pronounced bearish", which is clearly seen in the second indicator in the chart above (purple bars below zero = bearish mood). Now it has begun a new growth, so the British pound can formally count on growth. But, if we recall the situation with the euro, then there are big doubts that based on the COT reports, we can expect a strong growth of the pair. How can you count on it if the market buys the dollar more than the pound? The non-commercial group now has a total of 106,000 shorts and 59,000 longs open. The difference, as we can see, is still large. The euro cannot show growth if the major players are bullish, and the pound will suddenly be able to grow if the mood is bearish? We remain skeptical about the long-term growth of the British currency.

We recommend to familiarize yourself with:

Overview of the EUR/USD pair. October 4. It is still very difficult to wait for a strong growth from the euro.

Overview of the GBP/USD pair. October 4. The political absurdity in the UK persists.

Forecast and trading signals for EUR/USD on October 4. Detailed analysis of the movement of the pair and trading transactions.

GBP/USD 1H

The pound/dollar pair, as we see it now, has broken the downward trend on the hourly timeframe, as all key levels and lines have been overcome. Important lines and levels are also slowly being overcome on the higher TFs, so the pound is getting closer and closer every day to completing a disastrous period for itself. So far, the fundamental and geopolitical backgrounds do not imply a new fall for the pound. We highlight the following important levels for October 4: 1.0538, 1.0930, 1.1212, 1.1354, 1.1442. Senkou Span B (1.0905) and Kijun-sen (1.0932) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on positions. There are no important events planned for Tuesday in the UK and the US, so traders will have nothing to react to during the day. However, the pair moves 200-300 points every day, so it clearly doesn't need the help of news and reports to move very volatilely.

Explanations for the chart:

Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.

Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.

Support and resistance areas are areas from which the price has repeatedly rebounded off.

Yellow lines are 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.