GBP/USD 1H
The GBP/USD pair continued to trade mostly sideways on September 25. The horizontal movement continued under the Kijun-sen line for two consecutive days, as a result of which the pair’s quotes left the descending channel. And so a situation has now emerged for the pound, in which falling in the long term is called into question, and an upward correction will not start.
Therefore, it is necessary to wait until this situation is clarified. If buyers succeed in pushing the pair above the critical line, then the chances of an upward correction will sharply increase. Otherwise, the initiative will remain in the hands of the bears.
GBP/USD 15M
Both linear regression channels are more sideways than up or down on the 15-minute timeframe. Therefore, the sideways movement can be seen on the lowest timeframe as well. The latest Commitment of Traders (COT) report for the British pound showed that non-commercial traders got rid of buying the pound and opened Sell-contracts (shorts).
A group of commercial traders got rid of huge amounts of both longs and shorts of the pound. We then concluded that the pound sterling is now, in principle, not the most attractive currency for large traders. The new COT report showed absolutely minor changes for the “non-commercial” group. Buy-contracts (longs) fell by 2,000 while Sell-contracts decreased by 1,500. Thus, the net position for non-commercial traders remained practically unchanged for the reporting week (September 16-22).
At this time, the British pound continued to fall, which can be considered a consequence of the previous reporting week, when the net position of non-commercial traders greatly decreased, by 11,500 contracts. No changes in the rate of the pound/dollar pair on the 23rd, 24th, 25th, which will be included in the next report. Thus, a long term decline in the pound’s quotes is indeed questionable, although the pound is still the most unattractive currency in the foreign exchange market.
No major macroeconomic reports were released in the UK on Friday, September 25. And so, traders had to turn their eyes to the United States. However, they did not find anything interesting for themselves over there, because the pair spent the whole day in a narrow price range. But there is a new scandal that is associated with US President Donald Trump.
This time, 3,500 American companies filed lawsuits against the presidential administration, which believe that authorities have illegally increased duties on Chinese goods. The only thing that can be said about this is “What a turn!” It seems that American businessmen did not wait for Trump to continue the trade war with China, from which, as we have already found out, so far only damages America itself. It seems that US business did not wait for the war to begin against it, as Trump believes that all American companies should return their production to the United States.
And for those who refuse to do this, it is quite possible that taxes will be greatly increased. Thus, just 5 weeks before the election, big American business showed how badly it wants Trump to be re-elected for a second term.
We have two trading ideas for September 28:
1) Buyers took the first step to meet the initiative by breaking the downward channel. You can still consider buy positions on the pound, but first the price should settle above the Kijun-sen line (1.2768), and then you can aim for the Senkou Span B line (1.2871) and the resistance level of 1.3020. Take Profit in this case will be from 80 to 200 points. The current fundamental background is simultaneously bad for both the pound and the dollar. Therefore, we might even observe a flat for some time.
2) Sellers can only focus all their efforts on keeping the pair below the critical line. However, this is not enough, it is necessary that the downward movement resumed in the coming days, otherwise a flat will begin. While this is not the case, short positions remain relevant with the targets at support levels 1.2667 and 1.2558. Take Profit in this case can range from 60 to 160 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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