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GBP/USD. April 26. The British pound doesn’t know what to do before central bank meetings
April 26, 2023 12:22 pmVideo
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On the hourly chart, the GBP/USD pair on Tuesday made a strong drop during the day but then turned in favor of the British pound and began an equally strong growth. When I wrote the article, there were still 12 hours of trading ahead until the next day, but the British pound had already risen nearly 100 points. The corrective level of 100.0% (1.2447) is currently not a source of signals. Bulls and bears pull the rope, and no one has a decisive advantage. The pair is now growing, and it may already be falling in the second half of the day.
Yesterday, the news background for the British pound and the US dollar was weak. Only two reports during the day were available to traders, and I would only have drawn readers’ attention to them if it was for the strong drop in the US dollar. The number of building permits in the US amounted to 1.43 million (slightly higher than expected), and the number of new home sales – was 0.683 million, which is also slightly above expectations. It might be thought that these two reports supported the bears, but they were released when the pair had already completed most of its downward path. These reports are unimportant, and traders could not have perceived their values too emotionally. Thus, I believe they had no impact on traders’ sentiment. Given that both pairs traded quite actively on Monday and Tuesday, and there were no truly important events on these days, I conclude that traders currently do not pay attention to the news background since it is almost non-existent. It turns out that strong market movements are pure improvisation that could not have been predicted. And today, in the first half of the day, it is already evident that this picture persists. The news background is still absent, and the pair is confidently growing.
On the 4-hour chart, the pair completed a reversal in favor of the US dollar and consolidation below the ascending trend corridor. I believe the exit from the corridor is a very important graphical signal, indicating a change in sentiment to “bearish.” The “bullish” divergence allowed for some growth, but in recent weeks the pair’s movement can be characterized as “horizontal.” Closing below 1.2441 will favor the US currency and cause a new decline toward the Fibonacci level of 127.2% (1.2250).
Commitments of Traders (COT) report:
During the last reporting week, the sentiment of the “non-commercial” category of traders changed to a more “bullish” stance. The number of long contracts held by speculators decreased by 1,094 units, while the number of short contracts decreased by 4,794. The overall sentiment of major players changed to “bullish,” but the number of long and short contracts is now almost equal: 54,000 and 52,000, respectively. The sentiment in the market for the British pound has been “bearish” for a long time, but all this time, bulls have been strengthening their positions, and the pound has been actively growing. The graphical analysis indicates a possible decline, but it may be short-lived. Thus, the prospects for the pound remain good, but a decline can be expected in the short term.
News calendar for the US and UK:
US – core durable goods orders (12:30 UTC).
On Wednesday, the economic event calendars contained only one entry for the US, but it needed to be more important. The impact of the news background on traders’ sentiment today will be weak.
GBP/USD forecast and trading advice:
I recommend selling the British pound with targets of 1.2380 and 1.2342 in case of consolidation below the 1.2441–1.2447 zone. Purchases of the British pound were possible upon closing above the level of 1.2447 on the hourly chart, with a target of 1.2500–1.2510. Until they close below 1.2447, they can be kept open.
The material has been provided by InstaForex Company – www.instaforex.com
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