sell signals

The GBP/USD currency pair failed to continue its upward movement for the third consecutive time on Tuesday after consolidating above the moving average line. It is worth noting that last week the pair showed significant growth, but there were hardly any solid reasons behind such a movement. Just looking at the calendar of fundamental events and the movements of the EUR/USD pair during the same period confirms this.   Currently, the pound is trying to figure out its next move. It remains close to its local peaks, which are too high for its current conditions. Remember that there are no substantial reasons for it to be that high. One of the reasons for the pound's strong rally in recent weeks could have been the oversold condition of the CCI indicator on May 11.     But it has already been accounted for and worked out in this case. It's time to head down again. There were no important publications or events in the UK or the US on Tuesday. Overall, this week will have a limited number of important events and news.     Therefore, the pair may continue to swing sideways. However, in the medium term, we expect it to decline in almost any case. Whether it will happen remains an open question because the market has shown us in recent months that it can buy when 80% of the factors suggest selling. In the 24-hour timeframe, the price rebounded from a critical line, and this signal is the main hope for a decline soon.     The Kijun-sen line is strong, so a decline can be expected after the rebound. Additionally, there won't be any significant reports or events soon to shift the market sentiment to "bullish" again suddenly. No matter how you look at it, the word "decline" is evident everywhere. There is no fundamental background, only sell signals. Regarding the fundamental background, there is nothing new to say after Tuesday.     There weren't even any minor speeches from the Bank of England or Fed officials. The next Federal Reserve meeting will occur on June 13-14, so the "quiet period" has already begun. This means there will be no speeches by Fed representatives until the meeting.   The same applies to BoE members. The topic of US government debt is closed. There is no news. Therefore, the pair may trade chaotically and flatly or swing back and forth over the next few weeks. Be prepared for any outcome. By the way, the CCI indicator almost entered the overbought zone again. If that had happened, the probability of a new decline would have increased significantly. Without that, we can only wait for a decline and be wary of another illogical rally.       We have already discussed the Fed rates in the article on EUR/USD; there is nothing new about the Bank of England's rates. It will undoubtedly increase by 0.25% at the next meeting, the thirteenth consecutive hike. Inflation in the UK remains high, and there is no guarantee it will slow down at the same pace as in April. Thus, the British regulator cannot ease its monetary pressure, but at the same time, the rate has already risen to 4.5%. This is not the maximum possible value. The rate could increase by another 0.25-0.5%, but GDP has remained near zero growth for three consecutive quarters. According to Andrew Bailey, each subsequent rate hike could harm the British economy, which will not enter a recession this year.   But it's uncertain. Let's mention the "head and shoulders" pattern forming between May 30 and June 6. If it is indeed forming, it provides another sell signal. Two shoulders are around the level of 1.2451. The head is around the level of 1.2543. The average volatility of the GBP/USD pair over the past five trading days is 98 pips. For the pound/dollar pair, this value is considered "average."   Therefore, on Wednesday, June 7, we expect movements between 1.2322 and 1.2518. Reversal of the Heiken Ashi indicator back upward will signal a new upward movement phase.     Nearest support levels: S1 - 1.2421 S2 - 1.2390 S3 - 1.2360   Nearest resistance levels: R1 - 1.2451 R2 - 1.2482 R3 - 1.2512   Trading recommendations: On the 4-hour timeframe, the GBP/USD pair has settled below the moving average line, so short positions are currently relevant, with targets at 1.2360 and 1.2329. These positions should be held until the Heiken Ashi indicator reverses upward. Long positions can be considered if the price consolidates above the moving average line with targets at 1.2482 and 1.2512.   Explanations for the illustrations: Linear regression channels - help determine the current trend. The trend is strong if both channels are directed in the same direction. Moving average line (settings 20,0, smoothed) - determines the short-term trend and the direction in which trading should be conducted.   Murray levels - target levels for movements and corrections. Volatility levels (red lines) - the probable price channel in which the pair will move the next day based on current volatility indicators. CCI indicator - its entry into the oversold area (below -250) or overbought area (above +250) indicates an upcoming trend reversal in the opposite direction.  

On Friday, the GBP/USD pair did not even try to extend its downward movement. Take note that there was an ascending trend line during the entire bearish correction period (already two weeks), and the British currency does not seem like it is going to fall anytime soon.   At the same time, a new descending trend line has formed on the hourly chart, causing the pair to be trapped between two trend lines. On Friday, the UK released its GDP report. If it did provoke a market reaction, it was minimal, as its value for the first quarter fully coincided with the forecasts. There were no significant reports in the US, and secondary data such as personal income and spending, as well as the Personal Consumption Expenditures Price Index with the Consumer Sentiment Index, were unlikely to add pressure on the dollar. Especially considering that the USD has started falling in the morning. Therefore, we tend to believe that the nature of the movements were more technical. It was almost impossible to predict the upward reversal in the morning. On the hourly chart, a new support area was formed at 1.2598-1.2605, from which the pair rebounded. Currently, it is located between the Senkou Span B and Kijun-sen lines, and has also tested the trend line. There's a high probability of a rebound and a new downtrend, but the movement is currently volatile. The only signal was formed at the beginning of the US session when the price broke through the Ichimoku indicator lines and the level of 1.2693. It was not the best signal, and traders could only gain 10 pips. But it's better than false signals or losses.     COT report: According to the latest report, non-commercial traders opened 2,800 long positions and closed 2,500 short ones. The net position increased by 5,300 in just a week and continues to grow. Over the past 9-10 months, the net position has been on the rise. We are approaching a point where the net position has grown too much to expect further growth. We assume that a prolonged bear run may soon begin, even though COT reports suggest a bullish continuation. It is becoming increasingly difficult to believe in it with each passing day. We can hardly explain why the uptrend should go on. However, there are currently no technical sell signals. The pound has gained about 2,500 pips. Therefore, a bearish correction is now needed. Otherwise, a bullish continuation would make no sense. Overall, non-commercial traders hold 52,300 sell positions and 104,400 long ones. Such a gap suggests the end of the uptrend. We do not see the pair extending growth in the long term.     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 fundamental backdrop for the pound is getting weaker. The dollar also lacks a fundamental advantage but has already lost 2,500 pips over the past 10 months and requires a correction. On July 3, 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 (1.2737) and Kijun-sen (1.2674) 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 Monday, manufacturing PMIs are scheduled for release in both the UK and the US. All the reports, except for the US ISM, will be released in the second estimate, which is unlikely to surprise traders. However, the ISM index may show an unexpected value and, accordingly, stir some market reaction.   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 first half of the year was rather choppy for the US dollar as massive bets of weakness were scaled down.  Many on Wall Street expected the dollar to weaken as most of the other major currencies were about to deliver significantly more tightening.  Regional growth rotations on an improving outlook from a roaring Chinese economy were also supposed to support the case for strengthening commodity demand. The dollar might be positioned for a little more short-term strength here as the odds for more rate hikes have steadily increased while rate cut bets get pushed into next year.  The Fed’s higher for longer stance on rates seems to slowly be winning over some traders. Macro traders will undoubtedly be following the NFP report, but may fixate over next week’s inflation report.  We could actually get a soft report that gives us a  headline 2.9% year over year reading.  The June inflation report might be a short-term bottom for the disinflation process as the base effects will be responsible for a large part of the decline.  By the end of summer, inflation might prove to be sticky given the current drivers, which includes economic resilience, a strong labor market, and decent spending.   USD/JPY Sell signals are emerging and intervention talk is brewing given we are at levels that triggered Japanese intervention last year.  Many yen traders are focused on the 145.50 region and the 143.75 level.  Technical traders that follow DeMark indicators are eyeing a potential sell countdown, which would require a drop below the 143.90 level.  If prices closed above the 145.51 level, further upside could target the 150 zone.  Last year, the Demark countdown finished in mid-July and it soon saw an over 6% drop.    

Analysis of transactions and tips for trading EUR/USD Further decline became limited because the test of 1.0503 coincided with the sharp drop of the MACD line from zero. No economic data for the eurozone will affect market volatility ahead of important labor market reports, except for the data on industrial orders in Germany, trade balance in Italy, and retail trade volume in France. However, they will unlikely have much impact on the market.   For long positions: Buy when euro hits 1.0552 (green line on the chart) and take profit at the price of 1.0595. Growth will occur amid weak US labor market data. Note that when buying, the MACD line should be above zero or rising from it. Euro can also be bought after two consecutive price tests of 1.0524, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0552 and 1.0595. For short positions: Sell when euro reaches 1.0524 (red line on the chart) and take profit at the price of 1.0475. Pressure may return, but they will not occur in the morning. Note that when selling, the MACD line should be below zero or dropping down from it. Euro can also be sold after two consecutive price tests of 1.0552, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0524 and 1.0475.     Thin green line - entry price at which you can buy EUR/USD Thick green line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further growth above this level is unlikely. Thin red line - entry price at which you can sell EUR/USD Thick red line - estimated price where you can set Take-Profit (TP) or manually fix profits, as further decline below this level is unlikely. MACD line- it is important to be guided by overbought and oversold areas when entering the market  

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.