Outlook for GBP/USD on November 7. COT report. The pound didn’t put the matter on hold
November 7, 2023 7:24 am
Analysis of GBP/USD 5M
On Monday, GBP/USD traded more actively and even showed trends compared to the EUR/USD pair. The main movement occurred during the U.S. trading session, but the price also had its share of action during the European session. As a result, by the end of the day, the pair had already started to correct to the downside, as we had anticipated. A fairly strong sell signal was even formed on the 5-minute chart, but more on that below. There were no significant macroeconomic or fundamental events in either the UK or the US on Monday. Therefore, the movements were purely technical. However, we warned you that a correction could follow after Friday’s growth, and the overall bullish correction that had been developing over the past month could be considered complete. Consequently, we expect the pound to continue falling in almost any case.
In general, only one trading signal was generated yesterday. At the very beginning of the U.S. trading session, the price bounced off the level of 1.2429 with a slight margin of error, afterwards it dropped to the level of 1.2349. Traders could have made a profit of around 40-60 pips on a short position, depending on when they closed the trade.
COT report:
COT reports on the British pound also align perfectly with what’s happening in the market. According to the latest report on GBP/USD, the non-commercial group closed 3,400 long positions and 1,700 short ones. Thus, the net position of non-commercial traders decreased by another 1,700 contracts in a week. The net position indicator has been steadily rising over the past 12 months, but it has been firmly decreasing over the past three months. The British pound is also losing ground. We have been waiting for many months for the sterling to reverse downwards. Perhaps GBP/USD is at the very beginning of a prolonged downtrend. At least in the coming months, we do not see significant prospects for the pound to rise, and even if we’re currently witnessing a corrective phase, it could persist for several months.
The British pound has surged by a total of 2,800 pips from its absolute lows reached last year, which is an enormous increase. Without a strong downward correction, a further upward trend would be entirely illogical (if it is even planned). We don’t rule out an extension of an uptrend. We simply believe that a substantial correction is needed first, and then we should assess the factors supporting the US dollar and the British pound. A correction to the level of 1.1844 would be enough to establish a fair balance between the two currencies. The non-commercial group currently holds a total of 63,700 longs and 85,800 shorts. The bears have been holding the upper hand in recent months, and we believe this trend will continue in the near future.
Analysis of GBP/USD 1H
On the 1H chart, GBP/USD has finally formed an upward movement, which could serve as a convincing conclusion to the entire bullish correction that has been ongoing for a month. The pair has started to fall, so now we’re waiting for it to drop towards the Ichimoku indicator’s lines. In the future, we may see choppy movements within a limited price range, but in the medium-term perspective, we anticipate a downward movement.
As of November 7, we highlight the following important levels: 1.1760, 1.1874, 1.1927-1.1965, 1.2052, 1.2109, 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2520, 1.2605-1.2620, 1.2693. The Senkou Span B (1.2177) and Kijun-sen (1.2260) lines can also be sources of signals. Signals can be “bounces” and “breakouts” of these levels and lines. It is recommended to set the Stop Loss level to break-even when the price moves in the right direction by 20 pips. The Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The illustration also includes support and resistance levels that can be used to lock in profits from trades.
On Tuesday, there are no significant events scheduled in the UK or the US. As a result, the pair will likely go through low volatility today. However, the pound has already started to fall, so today we may witness a continuation of the downward movement.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;
Yellow lines are trend lines, trend channels, and any other technical patterns;
Indicator 1 on the COT charts is the net position size for each category of traders;
Indicator 2 on the COT charts is the net position size for the Non-commercial group.
The material has been provided by InstaForex Company – www.instaforex.com
Analysis of GBP/USD 5M
On Monday, GBP/USD traded more actively and even showed trends compared to the EUR/USD pair. The main movement occurred during the U.S. trading session, but the price also had its share of action during the European session. As a result, by the end of the day, the pair had already started to correct to the downside, as we had anticipated. A fairly strong sell signal was even formed on the 5-minute chart, but more on that below. There were no significant macroeconomic or fundamental events in either the UK or the US on Monday. Therefore, the movements were purely technical. However, we warned you that a correction could follow after Friday’s growth, and the overall bullish correction that had been developing over the past month could be considered complete. Consequently, we expect the pound to continue falling in almost any case.
In general, only one trading signal was generated yesterday. At the very beginning of the U.S. trading session, the price bounced off the level of 1.2429 with a slight margin of error, afterwards it dropped to the level of 1.2349. Traders could have made a profit of around 40-60 pips on a short position, depending on when they closed the trade.
COT report:
COT reports on the British pound also align perfectly with what’s happening in the market. According to the latest report on GBP/USD, the non-commercial group closed 3,400 long positions and 1,700 short ones. Thus, the net position of non-commercial traders decreased by another 1,700 contracts in a week. The net position indicator has been steadily rising over the past 12 months, but it has been firmly decreasing over the past three months. The British pound is also losing ground. We have been waiting for many months for the sterling to reverse downwards. Perhaps GBP/USD is at the very beginning of a prolonged downtrend. At least in the coming months, we do not see significant prospects for the pound to rise, and even if we’re currently witnessing a corrective phase, it could persist for several months.
The British pound has surged by a total of 2,800 pips from its absolute lows reached last year, which is an enormous increase. Without a strong downward correction, a further upward trend would be entirely illogical (if it is even planned). We don’t rule out an extension of an uptrend. We simply believe that a substantial correction is needed first, and then we should assess the factors supporting the US dollar and the British pound. A correction to the level of 1.1844 would be enough to establish a fair balance between the two currencies. The non-commercial group currently holds a total of 63,700 longs and 85,800 shorts. The bears have been holding the upper hand in recent months, and we believe this trend will continue in the near future.
Analysis of GBP/USD 1H
On the 1H chart, GBP/USD has finally formed an upward movement, which could serve as a convincing conclusion to the entire bullish correction that has been ongoing for a month. The pair has started to fall, so now we’re waiting for it to drop towards the Ichimoku indicator’s lines. In the future, we may see choppy movements within a limited price range, but in the medium-term perspective, we anticipate a downward movement.
As of November 7, we highlight the following important levels: 1.1760, 1.1874, 1.1927-1.1965, 1.2052, 1.2109, 1.2215, 1.2269, 1.2349, 1.2429-1.2445, 1.2520, 1.2605-1.2620, 1.2693. The Senkou Span B (1.2177) and Kijun-sen (1.2260) lines can also be sources of signals. Signals can be “bounces” and “breakouts” of these levels and lines. It is recommended to set the Stop Loss level to break-even when the price moves in the right direction by 20 pips. The Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The illustration also includes support and resistance levels that can be used to lock in profits from trades.
On Tuesday, there are no significant events scheduled in the UK or the US. As a result, the pair will likely go through low volatility today. However, the pound has already started to fall, so today we may witness a continuation of the downward movement.
Description of the chart:
Support and resistance levels are thick red lines near which the trend may end. They do not provide trading signals;
The Kijun-sen and Senkou Span B lines are the lines of the Ichimoku indicator, plotted to the 1H timeframe from the 4H one. They provide trading signals;
Extreme levels are thin red lines from which the price bounced earlier. They provide trading signals;
Yellow lines are trend lines, trend channels, and any other technical patterns;
Indicator 1 on the COT charts is the net position size for each category of traders;
Indicator 2 on the COT charts is the net position size for the Non-commercial group.
The material has been provided by InstaForex Company – www.instaforex.com
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