GBP/USD 5-Minute Analysis
On Tuesday, the GBP/USD pair traded sideways for most of the day. While the euro showed a confident decline, possibly even resuming its downtrend, the British pound held steady, defying expectations. As we've mentioned repeatedly, the British currency in 2024 continues to amaze with its resilience and stability against the dollar. It almost appears that everything is perfect in the UK, and the Bank of England has no intention of easing monetary policy. However, that is far from the case. The economy faces many challenges, and the BoE will likely eventually lower its key interest rate. This could explain why the pound's decline has been reluctant, though it is expected to accelerate in the future. The price has settled below the trend line and has twice failed to overcome the 1.2796-1.2816 zone.
There were no significant events in the UK or the U.S. on Tuesday, so the pair's sideways movement is logical and expected. However, it's important to note that the pound is currently in a corrective phase within an overall downtrend. We continue to anticipate the resumption of the downtrend. We still do not see any reason for the pound to grow long-term. While the correction may persist for some time, it remains just that—a correction that inevitably ends at some point.
No trading signals were generated on the 5-minute chart yesterday. Midway through the U.S. trading session, the price approached the critical line but failed to work through it. Unlike the euro, there are no clear signs that the correction in GBP/USD is ending. The U.S. inflation report scheduled for today doesn't provide a clear direction for the dollar's future movement.
COT Report
COT reports for the British pound reveal that the sentiment among commercial traders has fluctuated significantly over the past years. The red and blue lines representing net positions of commercial and non-commercial traders frequently cross and typically remain near the zero mark. The price has broken through the 1.3154 level and subsequently approached the trendline. We believe the trend has shifted to bearish, and further consolidation below the trendline is anticipated.
The latest COT report shows that the "non-commercial" group closed 400 BUY contracts and opened 1,900 SELL contracts. As a result, the net position of non-commercial traders decreased by 2,300 contracts over the week.
The fundamental backdrop does not justify long-term purchases of the pound sterling. The currency has a genuine chance to resume its broader downtrend. While the trendline has thus far prevented further declines, failure to breach it could lead to a new upward wave, potentially pushing the pound above 1.3500. However, what fundamental basis exists for such growth at the moment?
GBP/USD 1-Hour Analysis
The GBP/USD pair maintains a bearish tone on the hourly timeframe, although it continues to correct upward. Aside from the technical necessity of periodic corrections, we still see no fundamental reasons for the pound to grow. However, the pound's remarkable resilience once again works in its favor. The British pound is rising even where the euro remains stagnant or where no growth would typically be expected.
For December 11, we highlight the following important levels: 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. Senkou Span B (1.2616) and Kijun-sen (1.2719) lines can also be sources of signals. Set a Stop Loss to break even after the price moves 20 pips in the correct direction to minimize potential losses in case of false signals. The Ichimoku indicator lines may shift during the day, so adjustments should be made when determining trading signals.
The UK has no significant events or reports scheduled for Wednesday, leaving all market attention on the U.S. inflation report. Without knowing the report's figures, it is impossible to predict the market reaction, but the outcome will likely set the tone for GBP/USD movements.
Illustration Explanations:
- Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
- Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
- Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
- Yellow Lines: Trendlines, channels, or other technical patterns.
- Indicator 1 on COT Charts: Reflects the net position size of each trader category.
