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Trading plan for the GBP / USD pair for week 18



DATE OF PUBLICATION: 2021-01-17 10: 11: 04GBP / USD 24H. During the second trading week of 2021, the GBP / USD currency pair as a whole continued to be in an uptrend. If the European currency nevertheless began a more or less tangible downward correction this week, the pound sterling once again renewed its 2.5-year highs. That is, there was a de-correlation of two main pairs. And only the speech of Andrew Bailey could lead to this, since there were no other important events in the UK this week. But more on that below. So far, the pair continues to gradually move upward, and the movement even on the 24-hour timeframe looks like a “swing”. The price regularly rolls back down, while the size of the correction often practically coincides with the size of the main movement preceding it. Well, I don’t want to talk about the reasons. From our point of view, the British currency is again rising in price exclusively due to the “speculative” factor. There was no reason for such a strong strengthening of the pound in recent months. Now in the States, of course, not everything is calm, but in Great Britain everything is frankly bad. From an epidemiological point of view, and from a fundamental one. COT report. During the last reporting week (January 5-11), the GBP / USD pair fell by 60 pips. Although the pound as a whole continues to maintain a steady upward trend. But the changes that the latest COT report showed are really impressive. Let’s remind that the last few reports “differed” with scanty changes that did not allow any conclusions to be drawn. Professional traders simply opened very few contracts for the British currency. From our point of view, such behavior of the “Non-commercial” group is quite understandable. For there are few reasons to trade the pound actively, given the epidemiological and economic news from Foggy Albion. But in the last reporting week, professional traders immediately opened 10.5 thousand Buy contracts and 3.2 thousand Sell contracts. Considering that about 80 thousand contracts were opened before this report, +13 thousand is a lot. Thus, the net position of non-commercial traders increased immediately by 7 thousand. Simply put, the mood of the major players has become much more bullish. Thus, the “technique” and COT reports speak in favor of the continuation of the upward movement. But for how long will market participants ignore the fundamental background? The entire fundamental background for the GBP / USD pair this week boiled down to the speech of the head of the Bank of England, Andrew Bailey. As we said earlier, from our point of view, market participants ignored many negative theses and turned their attention only to the words about the problematic nature of using negative rates. Although a day earlier, a member of the monetary committee Sylvanas Tenreiro said that the Bank of England continues to study the issue of applying negative rates. However, after Bailey’s speech, the pound sterling began to rise in price again and at that moment another round of uncorrelation of the euro / dollar and pound / dollar pairs began. Serious epidemiological problems remain in the UK. Recall that in recent weeks, the number of daily recorded cases of the disease “coronavirus” has grown from 20 thousand to 50-60 thousand. The country continues to remain in the third “lockdown” and this will inevitably entail a reduction in GDP. However, traders continue to buy the pound anyway. And this is an inexplicable fact. Of course, one can assume that it is about the American dollar. The situation in the States is now also quite difficult, but it is difficult from a political point of view. And also recall that the euro has been depreciating throughout the current week. In general, we can only draw the previous conclusion: market participants still ignore 90% of the fundamental background and macroeconomic statistics. In this situation, it remains only to trade according to the “technique”. Trading plan for the week of January 18 – 22: 1) The price without any problems keeps the upward trend and barely began to correct this Friday. The pair may even go down now 200-300 points in the “high volatility swing” mode, but there is no reason to wait for the uptrend to end right now. Thus, on the 24-hour timeframe, the target for the upward movement remains the level of 1.3851. We recommend that you continue to consider options for opening long positions on a higher timeframe as long as the price is above the critical line, and do not try to guess when the uptrend ends. 2) Sellers are still rather weak. Last week the bears tried to seize the initiative, but in the end everything ended with only a minimal pullback. Thus, for the possibility of opening short positions, it is now recommended to wait again, at least, for the price fixing below the critical line. If this condition is met, a downtrend may form on the 4-hour timeframe. Explanations to the illustrations: Price levels of support and resistance (resistance / support) – levels that are targets when opening buy or sell. You can place Take Profit levels near them. Indicators Ichimoku, Bollinger Bands, MACD. Support and resistance areas – areas from which the price has repeatedly bounced. Indicator 1 on COT charts – the size of the net position of each category of traders. Indicator 2 on COT charts – net position size for “Non-commercial” group. Material provided by InstaForex – www.instaforex.com Source – InstaForex

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