GBP/USD. October 9th. The pound broke out of the “bearish” corridor, but the prospects remain uncertain
October 9, 2023 12:22 pm
On the hourly chart, the GBP/USD pair experienced a decline to the level of 1.2112, bounced from it, and resumed its upward movement towards the Fibonacci level of 161.8%–1.2250. A rebound from this corrective level led to a reversal in favor of the US dollar and the start of a new decline towards the level of 1.2175. Closing the pair’s rate below 1.2175 increases the likelihood of further decline towards the next level of 1.2112. On Friday, bullish traders managed to secure a position above the descending trend corridor, which, with a high degree of probability, changed the trend to “bullish.” But there are a couple of “buts.”
The first “but” is the wave pattern. On Friday, a downward wave was formed, which did not even come close to the last low from October 4th. There was also an upward wave that easily broke through the peak on October 6th. Thus, we have received two signs of a trend change to “bullish.” However, I believe that the background information on Friday had a very strong impact on the pair’s movement, and perhaps we would not have seen anything like this if it were not for the US statistics on Friday. If so, then such signals should be treated with caution.
The second “but” is the rebound from the level of 1.2250. As we can see, one of the previous waves ended right around this level, but slightly higher. And if we assume that all the movement from October 4th to 6th is not three waves but one, then we have no signs of the end of the “bearish” trend, except for the exit from the descending corridor. In any case, new “bullish” signals are needed for buying the British pound. Rebounds from the levels of 1.2112 or 1.2175 and settles above 1.2250. So far, there are none, but there are “bearish” signals on the 4-hour chart. There is no background information on Monday, so movements can be calm between the levels of 1.2175 and 1.2250.
On the 4-hour chart, the pair made a reversal in favor of the British currency after the formation of a “bullish” divergence on the RSI indicator. The upward movement can continue towards the Fibonacci level of 50.0%–1.2289; however, the “bearish” divergence on the CCI indicator allows us to expect a reversal in favor of the US dollar and a resumption of the decline towards the level of 1.2008. A rebound in the pair’s rate from the level of 1.2289 will also work in favor of the American currency. The rebound from the upper line of the descending trend corridor is the same.
Commitments of Traders (COT) report:
The sentiment among “non-commercial” traders in the past reporting week has once again become less “bullish.” The number of long contracts held by speculators decreased by 10,839 units, while the number of short contracts increased by 11,510 units. The overall sentiment of large players has shifted to “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 73,000 versus 80,000. In my view, the British pound still has excellent prospects for a decline. I do not expect a strong pound rally in the near future. I believe that over time, bulls will continue to reduce their buy positions, as is the case with the European currency. Only a close above the descending corridor on the 4-hour chart will make me consider a new “bullish” trend.
News Calendar for the United States and the United Kingdom:
On Monday, the economic events calendar did not contain any significant entries. The influence of the information background on market sentiment will be absent today.
GBP/USD Forecast and Trading Recommendations:
Selling the British pound was possible on a rebound from the level of 1.2250, with targets at 1.2175 and 1.2112. Buying opportunities may arise today in the event of a rebound from the level of 1.2175, with targets at 1.2250 and 1.2342.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair experienced a decline to the level of 1.2112, bounced from it, and resumed its upward movement towards the Fibonacci level of 161.8%–1.2250. A rebound from this corrective level led to a reversal in favor of the US dollar and the start of a new decline towards the level of 1.2175. Closing the pair’s rate below 1.2175 increases the likelihood of further decline towards the next level of 1.2112. On Friday, bullish traders managed to secure a position above the descending trend corridor, which, with a high degree of probability, changed the trend to “bullish.” But there are a couple of “buts.”
The first “but” is the wave pattern. On Friday, a downward wave was formed, which did not even come close to the last low from October 4th. There was also an upward wave that easily broke through the peak on October 6th. Thus, we have received two signs of a trend change to “bullish.” However, I believe that the background information on Friday had a very strong impact on the pair’s movement, and perhaps we would not have seen anything like this if it were not for the US statistics on Friday. If so, then such signals should be treated with caution.
The second “but” is the rebound from the level of 1.2250. As we can see, one of the previous waves ended right around this level, but slightly higher. And if we assume that all the movement from October 4th to 6th is not three waves but one, then we have no signs of the end of the “bearish” trend, except for the exit from the descending corridor. In any case, new “bullish” signals are needed for buying the British pound. Rebounds from the levels of 1.2112 or 1.2175 and settles above 1.2250. So far, there are none, but there are “bearish” signals on the 4-hour chart. There is no background information on Monday, so movements can be calm between the levels of 1.2175 and 1.2250.
On the 4-hour chart, the pair made a reversal in favor of the British currency after the formation of a “bullish” divergence on the RSI indicator. The upward movement can continue towards the Fibonacci level of 50.0%–1.2289; however, the “bearish” divergence on the CCI indicator allows us to expect a reversal in favor of the US dollar and a resumption of the decline towards the level of 1.2008. A rebound in the pair’s rate from the level of 1.2289 will also work in favor of the American currency. The rebound from the upper line of the descending trend corridor is the same.
Commitments of Traders (COT) report:
The sentiment among “non-commercial” traders in the past reporting week has once again become less “bullish.” The number of long contracts held by speculators decreased by 10,839 units, while the number of short contracts increased by 11,510 units. The overall sentiment of large players has shifted to “bearish,” and the gap between the number of long and short contracts is widening, but now in the opposite direction: 73,000 versus 80,000. In my view, the British pound still has excellent prospects for a decline. I do not expect a strong pound rally in the near future. I believe that over time, bulls will continue to reduce their buy positions, as is the case with the European currency. Only a close above the descending corridor on the 4-hour chart will make me consider a new “bullish” trend.
News Calendar for the United States and the United Kingdom:
On Monday, the economic events calendar did not contain any significant entries. The influence of the information background on market sentiment will be absent today.
GBP/USD Forecast and Trading Recommendations:
Selling the British pound was possible on a rebound from the level of 1.2250, with targets at 1.2175 and 1.2112. Buying opportunities may arise today in the event of a rebound from the level of 1.2175, with targets at 1.2250 and 1.2342.
The material has been provided by InstaForex Company – www.instaforex.com
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