GBPUSD 1H
The GBP/USD pair continued to correct after a 700-point fall and crossed the critical Kijun-sen line on September 16. The pair also reached the resistance area of 1.3004-1.3024 by the end of the trading day and failed to overcome it the first time. Thus, the entire upward correction can be completed near this area. Also, the pair’s quotes left the downward channel, so the trend has changed to an upward one, but this can only continue if buyers manage to overcome the 1.3004-1.3024 area. Bears need to overcome the Kijun-sen line in order to return to the market.
GBPUSD 15M
Both linear regression channels are directed upward on the 15-minute timeframe, but we expect the downward movement to resume in the near future. The latest Commitments of Traders (COT) report for the British pound was completely unexpected. Despite the fact that the pound only fell and lost 700 points during September 2-8, non-commercial traders (the most important group of traders) still closed Sell-contracts (shorts) during this period. It has decreased by 8,000.
Buy-contracts (longs) were also closed, but in smaller quantities, only down by 3,500. Thus, according to the logic of things, the pound should have grown in price during this period, since the net position in the “non-commercial” category increased. One might think that other categories of traders have had a greater impact on the pound sterling. However, this is not the case either, since commercial traders opened 14,000 Buy-contracts and 9,000 Sell-contracts in the same period of time.
That is, the net position has grown for this category of traders, in other words, traders have become more bullish. And so we have witnessed a paradoxical situation when the report absolutely does not correspond to what is happening on the market. The next report, therefore, may show even more serious changes.
The fundamental background for the pound/dollar pair did not significantly change on Wednesday. Even the Federal Reserve meeting and its results could not influence the pair’s movement. The UK inflation report showed that the indicator began to accelerate in annual terms after falling to 0%, but the value of +0.2% is negligible. Formally, the value is higher than the forecast, so the pound could receive a bit of support.
The results of the Bank of England meeting will be summed up today and no serious changes in the parameters of monetary policy are expected here either.
The interest rate is likely to remain at 0.1%, and the asset repurchase program – at 745 billion pounds. In recent months, rumors have been actively circulating that by the end of the year the British regulator will expand the asset repurchase program by another 50 or 100 billion pounds, but market participants do not expect this to happen today. In general, surprises are possible, but, most likely, there won’t be any, therefore, the market reaction may be extremely weak. We have two trading ideas for September 17:
1) Buyers started to be active and have reached the 1.3004-1.3024 area, which we called a target yesterday. Thus, you can open new long positions after breaking through this area while aiming for the resistance level of 1.3121. Take Profit in this case will be about 80 points.
2) Sellers temporarily let go of the initiative, but not overcoming the 1.3004-1.3024 area gives them hope for returning the downward trend. Thus, in case the price settles below the critical line (1.2886), we recommend trading down again while aiming for 1.2661. The target is distant and may take several days to reach it. Take Profit in this case can be about 200 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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