The GBP/USD currency pair traded mostly sideways on Monday. However, by the end of the day on the hourly time frame, it settled below the rising trend line that it had been approaching for the past few days. Recall that last week the trend line had to be rebuilt, as the price fell below it. So now the situation is repeating itself. In our fundamental articles, we have already said that the upward trend may continue in the coming weeks and even months, but it is unlikely to be strong. That is, the pair can trade up for four days, then down for five days, then six up. Formally, there will be growth, but it will be very weak. The British currency now has no clear reasons to show strong growth. No important reports in the UK on Monday, so there was nothing for traders to react to. This explains the rather low volatility.
The situation is even sadder in regards to trading signals. None were formed during the first trading day of the week. The pair spent the entire day in a horizontal channel with a width of about 40 points, so it was not necessary to count on strong signals and high profits. On the other hand, it's even good that there were no signals, since only false signals are usually formed in flat conditions. It is important for traders to open profitable trades, and not just trades. If there are no strong signals, and the movement is flat, then there can be no profitable trades a priori.
The latest Commitment of Traders (COT) report on the British pound showed almost no change. During the week, the non-commercial group closed 700 long positions and opened 500 shorts. Thus, the net position of non-commercial traders decreased by only 1,200. The net position has been falling for three months already, which is perfectly visualized by the green line of the first indicator in the chart above or the histogram of the second indicator. The non-commercial group has already opened a total of 106,000 shorts and only 26,000 longs. Thus, the difference between these numbers is already more than four times. This means that the mood among professional traders is now "pronounced bearish". Note that in the case of the pound, the COT report data very accurately reflects what is happening in the market: the mood of traders is "very bearish", and the pound has been falling against the US dollar for a very long time. In the last two weeks, the pound has started rising, but even in the chart for this paragraph (daily timeframe), this movement looks very weak so far. Since in the case of the pound, the COT report data reflects the real picture of things, we note that a strong divergence of the red and green lines of the first indicator often means the end of the trend. Therefore, now you can really count on a new upward trend. And since the euro and the pound are very often traded in the same way, you can count on an upward trend for the euro. Of course, if the geopolitics or the foundation does not continue to deteriorate.
The pair has settled below the trend line on the hourly timeframe, so now the trend has formally changed to a downward trend. We expect the pound to continue to strengthen in the coming weeks, but now the movements can be very "ragged" and even waver. At this time, we recommend not to rush to sell. It is better to wait at least for a consolidation below the critical line, and only after that it will be possible to expect a fall to the Senkou Span B line. It will be inexpedient and pointless to rebuild the trend line for the second time, but it very well visualizes the weakening of the upward momentum in the last few days. You can still count on the pound to fall somewhat this week, but hardly a strong one. Today we identify the following important levels: 1.2259, 1.2405-1.2410, 1.2496, 1.2601, 1.2674, 1.2762. Senkou Span B (1.2376) and Kijun-sen (1.2573) lines can also be sources of signals. Signals can be "rebounds" and "breakthroughs" of these levels and lines. The Stop Loss level is recommended to be set to breakeven when the price passes in the right direction by 20 points. Ichimoku indicator lines can move during the day, which should be taken into account when determining trading signals. The chart also contains support and resistance levels that can be used to take profits on trades. There are no interesting events and reports on the calendar of events for Tuesday in the UK and the US. Thus, today the volatility may again remain low, although this night the pound fell quite unexpectedly by 50 points.
