GBP/USD 1H
The GBP/USD pair was trading approximately the same as the EUR/USD pair on August 14. Therefore, the pound/dollar pair remains in a flat between the levels of 1.3000 and 1.3180. As in the case of the European currency, there are also two support/resistance areas that the pair likes to rebound off: 1.3004-1.3024 and 1.3157-1.3181.
Since traders left the pair above the critical line last Friday, there are more chances for a resumption of growth within the side channel to its upper line. In general, the bears remain extremely weak and can not take the initiative in the market. Although, the bulls have not made any attempts to resume the upward trend in recent weeks.
GBP/USD 15M
Both linear regression channels are directed upwards on the 15-minute timeframe, but often change their direction of movement, which is absolutely normal for a flat. The latest Commitment of Traders (COT) report for the British pound, which was released on Friday, turned out to be almost an exact copy of the report on the euro currency. As for the euro, big traders opened new Buy-contracts (2,569) and closed Sell-contracts (8,405) in the reporting week . Thus, the net position for non-commercial traders increased by almost 11,000 during the reporting week, which, in fact, means an increase in bullish sentiment. We could draw the same conclusions based on the nature of the pair’s movement itself. Given the fact that we have not seen even a normal correction of the British pound for several weeks, we can make a clear conclusion that big traders are not selling this currency now. Therefore, even the COT report does not yet suggest the beginning of a new downward trend.
The fundamental background for the GBP/USD pair on Friday was expressed only by data from overseas. We have already made a conclusion based on the retail sales report. But traders ignored two other reports that were better than the forecast values. At least, the US currency did not receive any support. But on closer inspection, both of these reports were not so important or strong. The consumer confidence index from the University of Michigan only exceeded the forecast by a few tenths of points, and industrial production in July fully coincided with the forecast value, +3%. Macroeconomic data from the UK were not published. It was announced over the weekend that negotiations on the trade deal, for its first phase, concluded in January between China and the United States have been canceled. They were to be held in the format of a video conference with the participation of US trade representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin, and Chinese Vice Premier Liu He. The parties were expected to discuss the results of the trade deal and how both sides adhere to it. There is no talk of negotiations on the second phase of the agreement. However, as we can see, China and the US continue to be in a state of heightened conflict and are not eager to communicate with each other once again.
There are two main options for the development of events as of August 17:
1) Buyers in general continue to hold the pound/dollar initiative in their hands. We recommend opening new purchases of the British currency but not before we overcome the 1.3157-1.3181 area while aiming for the resistance level of 1.3275. In this case, the potential Take Profit is about 90 points. You can also try to buy the pound when the price rebounds from the Kijun-sen, but this signal will be weak and formed in a flat.
2) Bears have already failed to overcome the support area of 1.3003-1.3023 five or six times. Thus, if the price consolidates below the Kijun-sen line (1.3067), we can expect the price to fall in this area. Each trader has to decide for himself whether to reject this signal or not, since the pair as a whole remains in a flat. We do not see the pair below the 1.3003 level yet, but if this level is overcome, we recommend opening a sell position while aiming for 1.2956 and 1.2865.
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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