GBP/USD: Forecast and trading signals on April 6. COT report. Detailed analysis of price movement and trades. Resting on
April 6, 2023 7:25 am
5M chart of GBP/USD
On Wednesday, GBP/USD also slightly pulled back, which does not mean much for the pair’s prospects. The pound fell but it happened after several weeks of growth and exactly on the day when the pair was expected to strengthen. But now the market buys and sells whenever it wants. The movements and the market’s reaction on the fundamental and macroeconomic background are illogical. Today there will be no important reports either in the UK or in the US. That’s why traders just need to prepare for Friday, when NonFarm Payrolls and unemployment reports will be published in the US. If NonFarm Payrolls are declining compared to the previous month and unemployment rises, this will be a great opportunity to buy again. But will the market use it, given the complete illogic of what’s going on right now?
Formally, yesterday there were two trading signals. The pair rebounded from 1.2458 and then rebounded from 1.2429-1.2458. In the first case, it was able to go up more than 20 pips, so a Stop Loss should have been set and the position was closed by it. In the second case, the upward movement was much weaker, but the pair did not go far below the signal formation point. Therefore, the position was closed with a small loss, which is not critical.
COT report:
The COT reports on the British pound are again relevant. The recent one was issued on March 28. It showed that non-commercial traders closed 0.3 thousand buy orders and opened 3.3 thousand sell orders. Thus, the net position of non-commercial traders decreased by 3 thousand, without violating the general upward movement. The net position indicator has been steadily growing over the past 7-8 months but the sentiment of major players remains bearish. Although the pound sterling is growing against the US dollar (in the medium term), it is very difficult to explain this from a fundamental point of view. It is highly possible the pound will begin falling in the near future. Formally, it has already begun doing so since we have not seen a rise for three months already. So far, the movement looks more like a flat. Notably, both major pairs are moving about the same way now. However, the net position for the euro is positive and even implies the imminent completion of the upward momentum while for the pound sterling, it is negative, which allows us to bet on further growth. Notably, the British pound has already increased by 2,100 pips, which is a lot. What is more, without a strong downward correction, further growth will be absolutely illogical. The non-commercial group has opened a total of 52 thousand sell contracts and 28 thousand buy contracts. We remain skeptical about the long-term growth in the British currency and expect it to fall.
1H chart of GBP/USD
On the one-hour chart, GBP/USD tried to start a new downtrend, but with the same success as before. There are still no reasons for the pound to rise, but market participants don’t really care about this anyway. Consequently, the pair may continue rising as long as it wants. Crossing 1.2440 has brought the pair out of the three-month horizontal channel. A new trend line has been formed, which does not have much importance either. The price is located above the Ichimoku indicator lines. So far, everything speaks in favor of further strengthening the pound. On March 31, it is recommended to trade at the key level of 1.1927, 1.1965, 1.2143, 1.2185, 1.2269, 1.2342, 1.2429-1.2458, 1.2589, 1.2659, 1.2762. The Senkou Span B (1.2299) and Kijun Sen (1.2398) lines can also generate signals. Rebounds and breakouts from these lines can also serve as trading signals. It is better to set the Stop Loss at breakeven as soon as the price moves by 20 pips in the right direction. The lines of the Ichimoku indicator can change their position throughout the day which is worth keeping in mind when looking for trading signals. On Thursday, there are no important events in the UK and US, so we can consider this as a preparation for Friday. The situation is ambiguous now, as the pound rose too much in recent weeks and now it may start the same unreasonable fall at any macroeconomic background.
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 any 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 material has been provided by InstaForex Company – www.instaforex.com
5M chart of GBP/USD
On Wednesday, GBP/USD also slightly pulled back, which does not mean much for the pair’s prospects. The pound fell but it happened after several weeks of growth and exactly on the day when the pair was expected to strengthen. But now the market buys and sells whenever it wants. The movements and the market’s reaction on the fundamental and macroeconomic background are illogical. Today there will be no important reports either in the UK or in the US. That’s why traders just need to prepare for Friday, when NonFarm Payrolls and unemployment reports will be published in the US. If NonFarm Payrolls are declining compared to the previous month and unemployment rises, this will be a great opportunity to buy again. But will the market use it, given the complete illogic of what’s going on right now?
Formally, yesterday there were two trading signals. The pair rebounded from 1.2458 and then rebounded from 1.2429-1.2458. In the first case, it was able to go up more than 20 pips, so a Stop Loss should have been set and the position was closed by it. In the second case, the upward movement was much weaker, but the pair did not go far below the signal formation point. Therefore, the position was closed with a small loss, which is not critical.
COT report:
The COT reports on the British pound are again relevant. The recent one was issued on March 28. It showed that non-commercial traders closed 0.3 thousand buy orders and opened 3.3 thousand sell orders. Thus, the net position of non-commercial traders decreased by 3 thousand, without violating the general upward movement. The net position indicator has been steadily growing over the past 7-8 months but the sentiment of major players remains bearish. Although the pound sterling is growing against the US dollar (in the medium term), it is very difficult to explain this from a fundamental point of view. It is highly possible the pound will begin falling in the near future. Formally, it has already begun doing so since we have not seen a rise for three months already. So far, the movement looks more like a flat. Notably, both major pairs are moving about the same way now. However, the net position for the euro is positive and even implies the imminent completion of the upward momentum while for the pound sterling, it is negative, which allows us to bet on further growth. Notably, the British pound has already increased by 2,100 pips, which is a lot. What is more, without a strong downward correction, further growth will be absolutely illogical. The non-commercial group has opened a total of 52 thousand sell contracts and 28 thousand buy contracts. We remain skeptical about the long-term growth in the British currency and expect it to fall.
1H chart of GBP/USD
On the one-hour chart, GBP/USD tried to start a new downtrend, but with the same success as before. There are still no reasons for the pound to rise, but market participants don’t really care about this anyway. Consequently, the pair may continue rising as long as it wants. Crossing 1.2440 has brought the pair out of the three-month horizontal channel. A new trend line has been formed, which does not have much importance either. The price is located above the Ichimoku indicator lines. So far, everything speaks in favor of further strengthening the pound. On March 31, it is recommended to trade at the key level of 1.1927, 1.1965, 1.2143, 1.2185, 1.2269, 1.2342, 1.2429-1.2458, 1.2589, 1.2659, 1.2762. The Senkou Span B (1.2299) and Kijun Sen (1.2398) lines can also generate signals. Rebounds and breakouts from these lines can also serve as trading signals. It is better to set the Stop Loss at breakeven as soon as the price moves by 20 pips in the right direction. The lines of the Ichimoku indicator can change their position throughout the day which is worth keeping in mind when looking for trading signals. On Thursday, there are no important events in the UK and US, so we can consider this as a preparation for Friday. The situation is ambiguous now, as the pound rose too much in recent weeks and now it may start the same unreasonable fall at any macroeconomic background.
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 any 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 material has been provided by InstaForex Company – www.instaforex.com
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