extreme levels

On Thursday, the GBP/USD pair grew "out of nowhere" again. And it was an impressive one at that. Take note that there was no significant news from the UK this week. If, for example, the Bank of England had made hawkish statements, the movement would have been understandable.   However, all the data that influenced the market came from overseas, and many of them favored the dollar. The situation with the euro is slightly different, which explains its growth. After all, yesterday and the daybefore that, several important reports were released in the EU, two speeches by European Central Bank President Christine Lagarde took place, and the ECB minutes were published. But it is very difficult to say why the pound is rising again.       However, we did experience a good intraday trending movement yesterday, which made the trading signals strong and profitable. Initially, the pair consolidated below the range of 1.2429-1.2445 and managed to move down by about 20 pips, allowing for setting a stop loss at breakeven and leaving the trade without losses when the pair consolidated above the mentioned range. Based on the buy signal, long positions should have been opened, and the price subsequently surpassed the nearest target level of 1.2520.   The trade should have been manually closed in the evening, resulting in a profit of about 75 pips, which is quite good. But let's reiterate: it is convenient to trade when there is a strong and trend-driven movement. It is necessary to avoid flat markets.     According to the latest report, non-commercial traders closed 8,100 long positions and 7,100 short ones. The net position dropped by 1,000 but remained bullish. Over the past 9-10 months, the net position has been on the rise despite bearish sentiment. The pound is bullish against the greenback in the medium term, but there have been hardly any reasons for that. We assume that a prolonged bear run has begun. COT reports suggest a bullish continuation. However, we can hardly explain why the uptrend should go on.   Both major pairs are in correlation now. At the same time, the positive net position on EUR/USD shows the end of the uptrend. Meanwhile, the net position on GBP/USD is neutral. The pound has gained about 2,300 pips. Therefore, a bearish correction is now needed. Otherwise, a bullish continuation would make no sense even despite the lack of support from fundamental factors. Overall, non-commercial traders hold 57,600 sell positions and 69,200 long ones. We do not see the pair extending growth in the long term.     In the 1-hour time frame, the pair has started an upward movement, surpassing all the lines of the Ichimoku indicator. The pound doesn't exactly have grounds to buy the pound, which remains heavily overbought. However, take note that the market has the right to trade regardless of the fundamental and macroeconomic backdrop. The only thing I can say is that the movement doesn't correspond to the nature of the reports and news.   On June 2, trading levels are seen at 1.2269, 1.2349, 1.2429-1.2445, 1.2520, 1.2589, 1.2666, 1.2762. Senkou Span B (1.2550) and Kijun-sen (1.2375) lines may also generate signals when the price either breaks or bounces off them. A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals.   There are also support and resistance which can be used for locking in profits. Today, the event calendar is empty in the UK.   On the other hand, the United States will release its highly anticipated Nonfarm Payrolls and unemployment reports. We have no doubt that the market will react to them, and the reaction could be practically anything - it is currently impossible to predict the values of the reports. Indicators on charts:   Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. The Kijun-sen and Senkou Span B lines are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.  

The EUR/USD pair sharply grew on Thursday. It wasn't exactly predictable, but it was not illogical either. The first factor to consider is that the pair had been declining over the past month, indicating an impending upward correction. Furthermore, Thursday's macroeconomic backdrop could be interpreted in different ways.   The correlation between inflation and the European Central Bank's rates no longer exists, so a more significant slowdown in the EU Consumer Price Index did not trigger a decline in the euro, as it might have a few months ago. We can consider ECB President Christine Lagarde's speech as "moderately hawkish," and the minutes of the recent ECB meeting revealed that several members of the monetary committee supported a 0.5% rate hike in May. Thus, the euro had the right to grow.       There were an adequate number of trading signals, and since the movement was good and there was a trend-driven movement, it is not surprising for traders to gain profit. Initially, the pair bounced from the level of 1.0669 (a buy position should have been opened), then surpassed a critical line (supporting the trade), and finally reached the level of 1.0762 (where profit should have been taken). As a result, you could earn 85 pips. Such opportunities have been rare lately due to the lack of normal intraday trends.     The COT report for May 23 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish. Notably, we may assume by the extremely bullish net position that the uptrend may soon stop.   The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing. The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,600 and short positions rose by 4,700. The net position dropped by 13,300. The number of long positions exceeds that of short ones by 174,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     The COT report for May 23 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish. Notably, we may assume by the extremely bullish net position that the uptrend may soon stop.   The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing. The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,600 and short positions rose by 4,700. The net position dropped by 13,300. The number of long positions exceeds that of short ones by 174,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.  

The EUR/USD pair sharply fell on Friday. Volatility was high, but the day can be roughly divided into two parts: before Nonfarm Payrolls (NFP) and after. Prior to the release of US data, the market was relatively flat. This is not surprising as there were no significant events or reports in the first half of the day.     After the release of the NFP data, the pair sharply fell, which was logical, as the data exceeded expectations. Moreover, it exceeded forecasts twice as much, which speaks for itself: the US labor market is in excellent condition, despite the high interest rates set by the Federal Reserve.     The increase in the unemployment rate by 0.3% was no longer of particular importance. Trading signals were not the best due to the morning flat. During the European trading session, the pair rebounded from the level of 1.0762 thrice and failed to move up even by 10 pips each time.     After the release of the NFP data, the pair initially started to decline, then returned to the level of 1.0762, and then it fell again. Since the NFP data was very strong, it was reasonable to consider only trades that anticipated the dollar's growth, in other words, selling opportunities.     The last sell signal resulted in a profit of about 40 pips. The morning trade (which was only one) could have been closed at breakeven due to the same flat market conditions.   The COT report for May 30 was delivered on Friday. Over the past nine months, COT data has been in line with developments in the market. The net position (second indicator on the chart) has been on the rise since September 2022. The euro started to show strength approximately at the same time. Currently, the net non-commercial position is bullish and keeps growing further. Likewise, the euro is bullish.   Notably, we may assume by the extremely bullish net position that the uptrend may soon stop. The first indicator shows that, and the red and green lines are far away from each other, which is usually a sign that the end of the trend might be nearing.   The euro attempted to go down several months ago, but those were just minor pullbacks. In the reporting week, long positions of non-commercial traders decreased by 8,200 and short positions fell by 200. The net position dropped by 8,000. The number of long positions exceeds that of short ones by 165,000, a rather big gap. A correction or a new downtrend has started. So, it is clear that the pair will be bearish even without COT reports.     In the 1-hour time frame, the pair surpassed the descending trendline again, clearly indicating its intention to form an uptrend. This should be a correction, and afterwards the downward movement should resume. From a fundamental perspective, there are still no grounds for the pair to rise, but technically it may correct this week.   However, the price is below the Ichimoku indicator lines again, so it may fall again. On June 5, trading levels are seen at 1.0537, 1.0581, 1.0658-1.0669, 1.0762, 1.0806, 1.0868, 1.0943, 1.1092, as well as the Senkou Span B line (1.0785) and the Kijun-sen line (1.0708). Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance although no signals are made near these levels. Signals could be made when the price either breaks or bounces from these extreme levels. Do not forget to place Stop Loss at the breakeven point when the price goes by 15 pips in the right direction.   In case of a false breakout, it could save you from possible losses. Today, both the EU and the US will release their respective Services PMIs for May. You should pay attention to the US ISM services, since it is more important than "ordinary" business activity indexes. Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. Kijun-sen and Senkou Span B are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe.   They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.    

1H chart of GBP/USD In the 1-hour time frame, the pair started an upward movement and just as quickly ended it. The market insists on buying the pound, which remains significantly overbought and unjustifiably high. However, take note that the market has the right to trade regardless of the fundamental and macroeconomic backdrop. For now, we will consider the strong correction that we've seen last week and expect a revival of the downward movement.   On June 7, trading levels are seen at 1.2269, 1.2349, 1.2429-1.2445, 1.2520, 1.2589, 1.2666, 1.2762. The Senkou Span B line (1.2395) and the Kijun-sen line (1.2455) lines may also generate signals when the price either breaks or bounces off them. A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance which can be used for locking in profits. On Wednesday, there are no important events scheduled in either the UK or the US. Therefore, there will be no specific events to react to during the day, and volatility could be low again, and we can't expect trend-driven movements either.     Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. The Kijun-sen and Senkou Span B lines are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.  

1H chart of GBP/USD In the 1-hour chart, GBP/USD maintains a bullish bias, although it is correcting at the moment. The ascending trend line serves as a buy signal. However, we still believe that the British currency is overvalued and should fall in the medium term. The pair overcame the downward trend line, so the pound has an opportunity to show another round of the uptrend. So far, it has not crossed the Senkou Span B line, but it is the last line of defense on the way to a new uptrend. On July 5, trading levels are seen at 1.2349, 1.2429-1.2445, 1.2520, 1.2598-1.2605, 1.2693, 1.2762, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2726) and Kijun-sen (1.2662) may also generate signals when the price either breaks or bounces off them.   A Stop Loss should be placed at the breakeven point when the price goes 20 pips in the right direction. Ichimoku indicator lines can move intraday, which should be taken into account when determining trading signals. There are also support and resistance which can be used for locking in profits. On Wednesday, services PMI numbers for the UK in the second estimate for June will be released. Not the most significant indicator. We have the FOMC minutes for release in the US, which rarely contains important information. The pair will likely go through low volatility, but as we can see, the lack of news does not prevent the pound from continuing to rise against the USD.       Indicators on charts: Resistance/support - thick red lines, near which the trend may stop. They do not make trading signals. The Kijun-sen and Senkou Span B lines are the Ichimoku indicator lines moved to the hourly timeframe from the 4-hour timeframe. They are also strong lines. Extreme levels are thin red lines, from which the price used to bounce earlier. They can produce trading signals. Yellow lines are trend lines, trend channels, and other technical patterns. Indicator 1 on the COT chart is the size of the net position of each trader category. Indicator 2 on the COT chart is the size of the net position for the Non-commercial group of traders.  

Analysis of GBP/USD 5M   On Friday, GBP/USD, unlike EUR/USD, snapped higher. Volatility was slightly higher than for the euro, but it doesn't matter, as the pair has been trading in a flat for several weeks. This is evident on all timeframes, so the macroeconomic and fundamental backdrop is currently taking a back seat. To be precise, there was no fundamental backdrop last week, and most reports did not support the British pound. Therefore, the pair could have extended the decline that began a month and a half ago, but the market clearly took a break, so we did not see any interesting movements. The UK released its retail sales report, which doesn't require much discussion. The pair dipped lower as sales undershot forecasts. In the second half of the day, the market received a technical signal to grow, so by the end of the day, the pound had offset all morning losses. As already mentioned, one trading signal was formed. At the beginning of the US session, the price rebounded from the area of 1.2693-1.2700, and the pair rose by 30 pips. Traders could earn these 30 pips since there were no more signals until the end of the day. Therefore, the deal had to be closed manually. At least, the loss on the EUR/USD pair was offset. COT report:     According to the latest report, the non-commercial group of traders opened 7,300 long positions and 3,300 short ones. Thus, the net position of non-commercial traders increased by 4,000 positions in a week. The net position has been steadily growing over the past 11 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term.   There are no drivers for opening new long positions. Slowly, sell signals are emerging on the 4-hour and 24-hour charts. The British currency has already grown by a total of 2,800 pips, from its absolute lows reached last year, which is a significant increase. Without a downward correction, the continuation of the uptrend will be illogical. However, there has been no logic in the pair's movements for quite some time. The market perceives the fundamental background one-sidedly, ignoring any data in favor of the dollar. The Non-commercial group of traders has a total of 90,500 long positions and 39,500 short ones. I remain skeptical about the long-term growth of the pound sterling, and the market has recently begun to pay attention to short positions.   Analysis of GBP/USD 1H On the 1H chart, the pound/dollar pair continues to trade within a sideways channel. The channel has slightly expanded, so the flat hasn't ended. The lines of the Ichimoku indicator are currently weak, but from time to time they still work well with the market. Due to the flat, we have recorded the last values of the Senkou Span B and Kijun-sen lines. However, false and inaccurate signals can still form around them. The pair reached the upper band of the channel on Thursday, so now we can expect the pound to fall. On August 21, traders should pay attention to the following key levels: 1.2520, 1.2605-1.2620, 1.2693, 1.2786, 1.2863, 1.2981-1.2987, 1.3050. The Senkou Span B (1.2807) and Kijun-sen (1.2700) lines can also be sources of signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits. On Monday, no important events or reports lined up in the UK or the US. Thus, traders will have nothing to react to, so we will probably see weak and mixed up movements.   Description of the chart: Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals; The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals; Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals; Yellow lines are trend lines, trend channels, and any other technical patterns; Indicator 1 on the COT charts is the net position size for each category of traders; Indicator 2 on the COT charts is the net position size for the Non-commercial group. Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147 Read more: https://www.instaforex.eu/forex_analysis/352147  

COT reports on the British pound show that the sentiment of commercial traders has been changing quite frequently in recent months. The red and green lines, representing the net positions of commercial and non-commercial traders, often intersect and, in most cases, are not far from the zero mark. According to the latest report on the British pound, the non-commercial group closed 10,000 buy contracts and 4,200 short ones. As a result, the net position of non-commercial traders decreased by 5,800 contracts in a week. Since bulls currently don't have the advantage, we believe that the pound will not be able to sustain the upward movement for long . The fundamental backdrop still does not provide a basis for long-term purchases on the pound.   The non-commercial group currently has a total of 58,800 buy contracts and 44,700 sell contracts. Since the COT reports cannot make an accurate forecast of the market's behavior right now, and the fundamentals are practically the same for both currencies, we can only assess the technical picture and economic reports. The technical analysis suggests that we can expect a strong decline, and the economic reports have also been significantly stronger in the United States for quite some time now.   On the 1H chart, GBP/USD is making every effort to correct lower, but the uptrend remains intact. We believe that the British pound doesn't have any good reason to strengthen in the long-term. Therefore, at the very least, we expect the pair to return to the level of 1.2513. However, there are currently no sell signals, so the uptrend is still intact. On Tuesday, there are few reasons for the pair to show volatile movements. We may see a flat phase, a downtrend, or an uptrend (intraday), so we need to purely rely on technical analysis. We expect the pound to consolidate below the trendline, and in that case, we can consider selling while aiming for the Senkou Span B line. A n upward movement is theoretically possible today, but we see no reason for it, so you shouldn't consider buying at the moment. As of January 2, we highlight the following important levels: 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2513, 1.2605-1.2620, 1.2726, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B line (1.2646) and the Kijun-sen (1.2753) lines can also be sources of signals. Don't forget to set a breakeven Stop Loss to breakeven if the price has moved in the intended direction by 20 pips. The Ichimoku indicator lines may move during the day, so this should be taken into account when determining trading signals. Today, the UK and the US will release their second estimates of business activity indices in the manufacturing sector for December. These are not significant reports so it is unlikely for traders to react to them. Description of the chart: Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals; The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals; Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals; Yellow lines are trend lines, trend channels, and any other technical patterns; Indicator 1 on the COT charts is the net position size for each category of traders; Indicator 2 on the COT charts is the net position size for the Non-commercial group.