GBP/USD 1H
After a whole day of treading between the Senkou Span B and Kijun-sen lines, the GBP/USD pair continued to move up and approached the upper line of the descending channel on August 26, which, in fact, is directed more sideways than down. Nevertheless, there was a rebound from its lower line, so traders can count on an upward movement.
Senkou Span B and Kijun-sen lines, which are strong on any trend movement, present no danger to market participants at this time. A price rebound from the first resistance level of 1.3217 or the upper line of the channel can trigger a reversal of the downward movement within the same channel. The British currency will continue to grow only if the price closes above the descending channel.
GBP/USD 15M
Both linear regression channels turned upward on the 15-minute timeframe. Therefore, we now have an upward trend in the short term. The latest Commitments of Traders (COT) report for the British pound, which came out last Friday, was very predictable. In the period from August 12 to 18, non-commercial traders reopened Buy-contracts (5,880 units), and closed Sell-contracts, in total 2,232 units.
Thus, the net position for this category of traders has grown again, by as much as 8,000 contracts, which is a lot for the pound. Actually, until August 18 inclusive, the pound continued to grow against the US currency, so the data from the COT report perfectly reflects what was happening on the market at that time.
As for the period of August 19-25, for which a new COT report will be released tomorrow, during this time the British currency has fallen in price by about 150 points, which does not provide any good reason to expect that professional traders have begun to close Buy-contracts or open Sell-positions. Most likely, the new COT report will not show significant changes in the mood of large traders.
No fundamental background for the GBP/USD pair on Wednesday. The only report of the day – orders for durable goods in the US – was generally ignored by traders, although it could have provoked the dollar’s growth. No interesting information from the UK at all. Now, on the last two days of the week, traders will be watching speeches by Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium (Thursday) and also Bank of England Governor Andrew Bailey at the same event (Friday).
Perhaps these speeches will help the quotes in leaving the side channel. Although the price for the EUR/USD pair is also moving within a sideways channel, so we can say that everything is logical, the two main pairs correlate well. It makes no sense to talk about the long-term prospects of a particular currency now, since it is necessary for the flat to end in both major pairs.
The fundamental background is now diverse and it is not clear which of the factors will start to have a strong impact on this or that currency. Based on the above, we have two trading ideas for August 27:
1) Buyers have become a little more active in recent days. However, now they need to overcome the upper line of the descending channel and the resistance level of 1.3217 in order for the British currency to continue to rise in price. In this case, we will recommend continuing to buy with the target of 1.3346. Take Profit in this case will be about 100 points.
2) Bears can let go of the pair again. If quotes go above the descending channel, then sales will cease to be relevant. You can sell the pair if a rebound occurs from the 1.3217 level, targets will be at the Senkou Span B line (1.3132) and the lower channel line. For greater confidence, you can wait for the price to settle below the Senkou Span B line. Take Profit in this case will be from 60 to 140 points.
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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