GBP/USD 5-Minute Analysis
On Friday morning, the GBP/USD currency pair surged upward once again, but the movements throughout the day seemed highly illogical. Let's break it down: Why did the pound rise during the European trading session? The answer is that it didn't rise significantly, as there were no major events taking place in the UK at that time. Was the pound's rise influenced by the euro, which received support from a positive GDP report? If so, it creates an intriguing scenario where the pound increases for seemingly any reason.
Later, weak U.S. labor market and unemployment data were released during the American trading session. However, following this release, the dollar did not continue to decline. In the evening, Jerome Powell delivered a speech reaffirming the Federal Reserve's "moderately hawkish" stance. This should have triggered a strong rally in the U.S. dollar, especially as the market is currently concerned about a faster rate cut. Yet the dollar gained at most 30 pips. Overall, trying to find logic in the current movements of this currency pair is futile. The medium- and long-term technical outlooks still indicate a downward trend, but it seems that Donald Trump may continue to influence the dollar negatively.
Even forming a trend line on the hourly timeframe is technically impossible now—the movement is nearly vertical. Therefore, determining when the next local upward trend will end is almost impossible.
No trading signals were generated on Friday's 5-minute timeframe. Throughout the day, the price did not even approach any levels, and the Ichimoku indicator lines are significantly below the current price.
COT Report
COT reports for the British pound indicate that the sentiment among commercial traders has been fluctuating in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, frequently intersect and typically hover around the zero line. Currently, these lines are close to each other, indicating a roughly equal number of buy and sell positions.
On the weekly timeframe, the price initially broke the 1.3154 level before dropping to the trend line, which it subsequently broke through. This break suggests that the pound's decline is likely to continue. However, there was also a bounce from the second-to-last local low on the weekly chart, which could imply a flat market.
According to the latest COT report on the British pound, the "Non-commercial" group opened 7,800 buy contracts and closed 6,300 sell contracts. Consequently, the net position of non-commercial traders increased by 14,100 contracts over the week, which does not significantly favor the pound.
The fundamental backdrop still offers no solid reasons for long-term investments in the British pound, and the currency faces a real possibility of continuing its global downtrend. Although the pound has recently experienced a notable increase, the underlying cause appears to be related to Donald Trump's policies.
GBP/USD 1-Hour Analysis
On the hourly timeframe, the GBP/USD pair continues its new upward trend, which looks more like a dollar collapse. This may not be the last in a series of changing trends within the broader upward correction on the daily timeframe. However, we still do not see what could support long-term growth for the British pound. Currently, the only thing working in favor of the pound is Donald Trump, who appears to be deliberately trying to weaken the dollar unconventionally. The market is ignoring all other factors.
For March 10, we highlight the following important levels: 1.2237-1.2255, 1.2331-1.2349, 1.2429-1.2445, 1.2511, 1.2605-1.2620, 1.2691-1.2701, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. The Senkou Span B (1.2637) and Kijun-sen (1.2805) lines can also serve as signal sources. A Stop Loss level is recommended to be set at breakeven once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift throughout the day, so this should be considered when determining trading signals.
No significant or interesting events are scheduled in either the UK or the US on Monday. However, this does not mean the pair will remain stagnant throughout the day. Donald Trump may make new statements that shake the market, as has happened repeatedly over the past two months.
Illustration Explanations:
- Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
- Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
- Yellow Lines: Trendlines, trend channels, or any other technical patterns.
- Indicator 1 on COT Charts: Represents the net position size for each category of traders.
