GBP/USD. September 18th. The pound finds reasons to fall even on Monday
September 18, 2023 12:25 pm
On the hourly chart, the GBP/USD pair made a new reversal in favor of the American currency, rebounding from the corrective level of 127.2% (1.2440) on Friday. Thus, the quote’s decline may continue toward the next level at 1.2342. A rebound of the pair’s rate from this level at 1.2342 will favor the British currency and some growth towards the upper boundary of the descending trend corridor. Consolidation of quotes below 1.2342 increases the probability of further decline toward the next Fibonacci level at 161.8% (1.2250).
Waves still only talk about one thing – a “bearish” trend. Last week, there was a moment when a “bullish” trend could have started, but it quickly became clear that no one in the market was willing to buy the pound and didn’t see any reason to do so. Therefore, bears effortlessly formed a new downward wave, breaking through all the lows of the past two weeks. Since the pair continues to fall even on Monday (with an empty event calendar), there can be no signs of the trend ending, even theoretically.
On Friday, the dollar could have declined a bit because the consumer sentiment index from the University of Michigan was weaker than traders expected. However, industrial production grew stronger than expected, and before these two reports, the dollar was rising. Thus, it continued to rise after this news. Currently, there is a trend corridor, a wave pattern, and signals. All of this indicates a “bearish” trend. And this week, there are meetings of the Bank of England and the FOMC. The situation may change, but making such conclusions at the beginning of the week is strange. It’s advisable to wait for “bullish” signals, “hawkish” statements, and decisions from the Bank of England and “dovish” ones from the FOMC. Until all of this happens, consider selling the pound.
On the 4-hour chart, the pair continues to decline despite the earlier closing above the descending trend corridor. Two rebounds of the quotes from the level at 1.2450 worked in favor of the pound, but the growth was weak in both cases. A more significant rise in the pound can only be expected if the quotes are fixed above the corridor. The closing of the pair’s rate below the level at 1.2450 increases the chances of further decline of the pound towards the next Fibonacci level at 50.0% (1.2289).
Commitments of Traders (COT) report:
The sentiment among “Non-commercial” traders in the last reporting week has become less “bullish” again. The number of long contracts held by speculators increased by 4720 units, while the number of short contracts increased by 4930. The overall sentiment of major players remains bullish, and there is still an almost twofold gap between the number of long and short contracts: 97 thousand versus 51 thousand. The British pound had decent prospects for further growth a few weeks ago, but many factors have favored the US dollar. I don’t expect a strong rise in the British pound soon. Over time, bulls will continue to unwind their buy positions, as is the case with the European currency. The Bank of England can only change the market dynamics if it continues to raise interest rates for longer than planned. We will find the answer to this question precisely this week.
News Calendar for the US and the UK:
On Monday, the economic events calendar contains a few interesting entries. For the rest of the day, the influence of the news background on market sentiment will be absent.
GBP/USD Forecast and Trader Recommendations:
Selling the British pound was possible on the rebound from the level of 1.2440 with a target of 1.2342. Today, these trades can still be held open. New sales should be considered at a close below 1.2342. For buying, a rebound from the level of 1.2342 with a target of 1.2440 is required today.
The material has been provided by InstaForex Company – www.instaforex.com
On the hourly chart, the GBP/USD pair made a new reversal in favor of the American currency, rebounding from the corrective level of 127.2% (1.2440) on Friday. Thus, the quote’s decline may continue toward the next level at 1.2342. A rebound of the pair’s rate from this level at 1.2342 will favor the British currency and some growth towards the upper boundary of the descending trend corridor. Consolidation of quotes below 1.2342 increases the probability of further decline toward the next Fibonacci level at 161.8% (1.2250).
Waves still only talk about one thing – a “bearish” trend. Last week, there was a moment when a “bullish” trend could have started, but it quickly became clear that no one in the market was willing to buy the pound and didn’t see any reason to do so. Therefore, bears effortlessly formed a new downward wave, breaking through all the lows of the past two weeks. Since the pair continues to fall even on Monday (with an empty event calendar), there can be no signs of the trend ending, even theoretically.
On Friday, the dollar could have declined a bit because the consumer sentiment index from the University of Michigan was weaker than traders expected. However, industrial production grew stronger than expected, and before these two reports, the dollar was rising. Thus, it continued to rise after this news. Currently, there is a trend corridor, a wave pattern, and signals. All of this indicates a “bearish” trend. And this week, there are meetings of the Bank of England and the FOMC. The situation may change, but making such conclusions at the beginning of the week is strange. It’s advisable to wait for “bullish” signals, “hawkish” statements, and decisions from the Bank of England and “dovish” ones from the FOMC. Until all of this happens, consider selling the pound.
On the 4-hour chart, the pair continues to decline despite the earlier closing above the descending trend corridor. Two rebounds of the quotes from the level at 1.2450 worked in favor of the pound, but the growth was weak in both cases. A more significant rise in the pound can only be expected if the quotes are fixed above the corridor. The closing of the pair’s rate below the level at 1.2450 increases the chances of further decline of the pound towards the next Fibonacci level at 50.0% (1.2289).
Commitments of Traders (COT) report:
The sentiment among “Non-commercial” traders in the last reporting week has become less “bullish” again. The number of long contracts held by speculators increased by 4720 units, while the number of short contracts increased by 4930. The overall sentiment of major players remains bullish, and there is still an almost twofold gap between the number of long and short contracts: 97 thousand versus 51 thousand. The British pound had decent prospects for further growth a few weeks ago, but many factors have favored the US dollar. I don’t expect a strong rise in the British pound soon. Over time, bulls will continue to unwind their buy positions, as is the case with the European currency. The Bank of England can only change the market dynamics if it continues to raise interest rates for longer than planned. We will find the answer to this question precisely this week.
News Calendar for the US and the UK:
On Monday, the economic events calendar contains a few interesting entries. For the rest of the day, the influence of the news background on market sentiment will be absent.
GBP/USD Forecast and Trader Recommendations:
Selling the British pound was possible on the rebound from the level of 1.2440 with a target of 1.2342. Today, these trades can still be held open. New sales should be considered at a close below 1.2342. For buying, a rebound from the level of 1.2342 with a target of 1.2440 is required today.
The material has been provided by InstaForex Company – www.instaforex.com
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