Relevance up to 02:00 2022-07-12 UTC+2 Company does not offer investment advice and the analysis performed does not guarantee results. The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
The GBP/USD currency pair also began to correct on Friday. In principle, the movements of the euro and the pound on Friday were almost identical, just like almost every day over the past few months. In the first half of the day, the pound, as usual, was getting cheaper, but in the afternoon, despite strong statistics from overseas, the US dollar was already getting cheaper, as the bears began to take profits on previously opened short positions. However, this does not mean at all that the downward trend is now over. Formally, the pair is now above the critical line, which gives it the opportunity to continue growing towards the Senkou Span B. However, as in the case of the euro, it is still difficult for us to imagine that the pound will show a noticeable strengthening. You can also say that the British currency has already "celebrated" the resignation of Boris Johnson, so in the future you can not count on the support of this factor. Now everything again rests on US inflation and the Federal Reserve's monetary policy.
There were quite a lot of trading signals on Friday, but most of them should have been filtered out. The price rebounded from the critical line at the very beginning of the European trading session, so it was necessary to open short positions. Then the price overcame the level of 1.1974 and fell below it by another 55 points. But it couldn't get to the next level (1.1874). Therefore, either the profit on this deal was small (the deal should have been closed when consolidating above 1.1974), or the deal should have been closed manually below 1.1974. The next buy signal was formed when it settled above 1.1974 and it could also be worked out. The pair rose to the critical line, from which it rebounded, so the deal should have been closed here. And then, it was better to ignore all subsequent signals, because data on the labor market and unemployment in the United States came out at the very beginning of the US trading session, after which the "swing" began. Several good signals were formed, but it was better not to risk it. In any case, traders finished the day with a good profit.
The latest Commitment of Traders (COT) report again showed insignificant changes. During the week, the non-commercial group opened 4,400 long positions and 7,500 short positions. Thus, the net position of non-commercial traders decreased by 3,100. But what does it matter if the mood of the big players still remains "pronounced bearish", which is clearly seen in the second indicator in the chart above? And the pound, in spite of everything, still cannot show even a tangible upward correction? The net position fell for three months, then grew for several weeks, but what's the difference if the British currency is still depreciating? We have already said that the COT reports do not take into account the demand for the dollar, which is probably still very high right now. Therefore, even for the strengthening of the British currency, the demand for it must grow faster and stronger than the demand for the dollar. The non-commercial group now has a total of 96,000 shorts open and only 39,000 longs. The net position will have to show growth for a long time to at least equalize these figures. Neither macroeconomic statistics nor fundamental events support the UK currency. As before, we can only count on corrective growth, but we believe that in the medium term, the fall of the pound will continue.
We recommend to familiarize yourself with:
Overview of the EUR/USD pair. July 11. Hello, did you order "coronavirus"?
Overview of the GBP/USD pair. July 11. Boris Johnson's lies cost him his political career.
Forecast and trading signals for GBP/USD on July 11. Detailed analysis of the movement of the pair and trading transactions.
The British pound started another correction on the hourly timeframe. But it is very difficult to say what factors will continue to support the currency. In any case, we can always count on a purely technical correction. We highlight the following important levels on July 11: 1.1874, 1.1974, 1.2106, 1.2175. The Senkou Span B (1.2114) and Kijun-sen (1.2018) 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 trades. There are no major events or publications scheduled for Monday in the UK and the US. Thus, there will be nothing for traders to react to, so the correction can be continued.
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.