The GBP/USD pair was trading rather chaotic on Tuesday. Yesterday, we marked the 1.3903 level as a support level, from which a rebound can be made. However, in practice, the bears managed to overcome this level at the European trading session, but unfortunately their strength dried up. We recommended selling the pair if this level is overcome, however, after forming a signal, the pair was able to go down by only about 20 points. After that, the pound/dollar pair turned to the upside and began a new round of upward movement, which continues at this time. We did not recommend buying the pair on the rebound from the 1.3903 level, therefore, its reverse overcoming should not have resulted in opening long positions. In general, one might say that the bears keep the initiative in their hands. Recall that the pound has been rising for a very long time, and during these five months (this is only the very last round of the upward trend), there was practically no serious correction. Therefore, the downward movement is still more preferable. A rebound from one of the two most important lines of the Ichimoku indicator - Kijun-sen or Senkou Span B - can provoke a new round of downward movement. Therefore, we recommend that you be especially careful around these lines.
The lower linear regression channel is turning to the upside on the 15-minute timeframe, which signals a possible reversal of the trend in the short term. However, as can be clearly seen in the chart above, buyers have two serious obstacles, which they need to overcome in order for the upward movement to continue.
No reports have been released in the UK to date. America also had a completely empty news calendar. So nothing influenced the pair's movement during the day. We now continue to draw your attention to two factors. The first is a strong increase in the money supply in the United States, which can cause a regular drop in the dollar throughout 2021. The second is the need for a stronger downward correction, both against a 5-month upward trend and against a 12-month one.
The UK Services PMI for February is due on Wednesday. At the end of January, this indicator rose to 49.7 points, which is only slightly below the level of 50.0, below which the negative trend in the industry remains. Thus, if this indicator rises above the level of 50, this may support buyers of the pound, and the pair will more easily overcome the Kijun-sen and Senkou Span B lines. Also, the ISM PMI will be published in the afternoon, which can also affect the dollar and all the pairs in which it is present. However, we are only talking about a strong decline in this indicator, in this case the pound/dollar pair may continue to grow. If the value of the ISM index is higher than the forecast or approximately the same, then traders may not particularly react to it. The ADP report is unlikely to be considered by the markets.
We have two trading ideas for March 3:
1) Bulls have released the initiative, but the bears have not yet managed to take the pair too far from the 2.5-year highs. Thus, the upward movement can resume at any time, despite the exit of quotes from the channel. We believe that it will be possible to buy the pair again if the price settles above the Senkou Span B line (1.4007) or the Kijun-sen line (1.4016) while aiming for the 1.4080 level. Take Profit in this case can be up to 50 points.
2) Tuesday was very difficult for the sellers and they let go of the initiative within the day. So now they need to rebound off the Senkou Span B or Kijun-sen lines, or get the pair to settle below them after they have previously gone up. In this case, you are advised to sell the pair while aiming for the 1.3903 level. Take Profit in this case can be up to 80 points.
