Outlook for GBP/USD on September 5. COT report. Restoring fairness takes time
September 5, 2023 7:23 am
Analysis of GBP/USD 5M
GBP/USD was pushing higher on Monday. There was no particular reason behind this growth, but then again the move wasn’t strong enough to cause a fuss. Volatility amounted to just over 50 pips, which is quite low for the pound. Nevertheless, the pound sterling rose, and we previously mentioned that after the price fell on Thursday and Friday, it was possible for the pair to rise because there wasn’t any logic in the decline anyway. Recall that a number of US reports turned out to be weak. Therefore, it would be logical to assume that the US dollar should have fallen. However, it rallied on Thursday and Friday. That’s why we believe that there is a possibility of an uptrend to correct this injustice.
There were several trading signals despite the low volatility that traders had to deal with. In the beginning, the pair exceeded the range of 1.2605-1.2620, and then bounced off this area twice. In this case, traders could earn about 20 pips on the buy signal, allowing a breakeven Stop Loss to be set and avoid worries about the trade. Since there were no signals, the trade could be closed at any time. It was possible to make a profit of 10-15 pips from this trade.
COT report:
According to the latest report, the non-commercial group of traders closed 900 long positions and opened 9,800 short ones. Thus, the net position of non-commercial traders decreased by 10,700 positions in a week. The net position has been steadily growing over the past 11 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term. There are no drivers for opening new long positions. Sell signals are starting to appear on the 4-hour and 24-hour charts.
The British currency has already grown by a total of 2,800 pips, from its absolute lows reached last year, which is a significant increase. Without a downward correction, the continuation of the uptrend will be illogical. We are not against the uptrend; we just believe a solid correction is needed first. The market perceives the fundamental background one-sidedly, ignoring any data in favor of the dollar. The Non-commercial group of traders has a total of 97,000 long positions and 48,700 short ones. I remain skeptical about the long-term growth of the pound sterling, and the market has recently started to pay more attention to selling.
Analysis of GBP/USD 1H
On the 1H chart, the pound/dollar pair is trying to end its bullish correction. The price has settled below the Ichimoku indicator lines, but we consider the possibility of a new phase of the upward correction. In any case, we still expect the pair to fall in the medium term; but take note that you have to be cautious this week. There is a chance that the market will try to correct Friday’s movement.
On September 5, traders should pay attention to the following key levels: 1.2429-1.2445, 1.2520, 1.2605-1.2620, 1.2693, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2672) and Kijun-sen (1.2660) lines can also be sources of signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits.
No significant reports are planned in the UK and the US. Most likely, we should brace ourselves for another low-volatility day. However, we will be able to see the market’s true sentiment. If the pair rises, it would confirm our assumption about the previous imbalance.
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
GBP/USD was pushing higher on Monday. There was no particular reason behind this growth, but then again the move wasn’t strong enough to cause a fuss. Volatility amounted to just over 50 pips, which is quite low for the pound. Nevertheless, the pound sterling rose, and we previously mentioned that after the price fell on Thursday and Friday, it was possible for the pair to rise because there wasn’t any logic in the decline anyway. Recall that a number of US reports turned out to be weak. Therefore, it would be logical to assume that the US dollar should have fallen. However, it rallied on Thursday and Friday. That’s why we believe that there is a possibility of an uptrend to correct this injustice.
There were several trading signals despite the low volatility that traders had to deal with. In the beginning, the pair exceeded the range of 1.2605-1.2620, and then bounced off this area twice. In this case, traders could earn about 20 pips on the buy signal, allowing a breakeven Stop Loss to be set and avoid worries about the trade. Since there were no signals, the trade could be closed at any time. It was possible to make a profit of 10-15 pips from this trade.
COT report:
According to the latest report, the non-commercial group of traders closed 900 long positions and opened 9,800 short ones. Thus, the net position of non-commercial traders decreased by 10,700 positions in a week. The net position has been steadily growing over the past 11 months as well as the pound sterling. Now, the net position has advanced markedly. This is why the pair will hardly maintain its bullish momentum. I believe that a long and protracted downward movement should begin. COT reports signal a slight growth of the British currency but it will not be able to rise in the long term. There are no drivers for opening new long positions. Sell signals are starting to appear on the 4-hour and 24-hour charts.
The British currency has already grown by a total of 2,800 pips, from its absolute lows reached last year, which is a significant increase. Without a downward correction, the continuation of the uptrend will be illogical. We are not against the uptrend; we just believe a solid correction is needed first. The market perceives the fundamental background one-sidedly, ignoring any data in favor of the dollar. The Non-commercial group of traders has a total of 97,000 long positions and 48,700 short ones. I remain skeptical about the long-term growth of the pound sterling, and the market has recently started to pay more attention to selling.
Analysis of GBP/USD 1H
On the 1H chart, the pound/dollar pair is trying to end its bullish correction. The price has settled below the Ichimoku indicator lines, but we consider the possibility of a new phase of the upward correction. In any case, we still expect the pair to fall in the medium term; but take note that you have to be cautious this week. There is a chance that the market will try to correct Friday’s movement.
On September 5, traders should pay attention to the following key levels: 1.2429-1.2445, 1.2520, 1.2605-1.2620, 1.2693, 1.2786, 1.2863, 1.2981-1.2987. The Senkou Span B (1.2672) and Kijun-sen (1.2660) lines can also be sources of signals, e.g. rebounds and breakout of these levels and lines. It is recommended to set the Stop Loss orders at the breakeven level when the price moves in the right direction by 20 pips. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are support and resistance levels that can be used to lock in profits.
No significant reports are planned in the UK and the US. Most likely, we should brace ourselves for another low-volatility day. However, we will be able to see the market’s true sentiment. If the pair rises, it would confirm our assumption about the previous imbalance.
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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