GBP/USD. May 15. COT report: major players amplify the “bearish” mood. Bear traders still need to take the level of 1.2184

By | May 15, 2020
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GBP/USD. May 15. COT report: major players amplify the "bearish" mood. Bear traders still need to take the level of 1

GBP/USD – 1H.

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Hello, traders! According to the hourly chart, the pound/dollar pair continues to fall in quotes within the downward trend corridor, due to which the current mood of traders is characterized as “bearish”. Thus, today the process of falling can be continued. Closing the pair’s rate above the descending corridor will allow traders to count on a reversal in favor of the British currency and some growth, the goals of which can be obtained on the senior charts. Meanwhile, there is very little economic news from the UK again. They weren’t there yesterday, and they won’t be there today. However, the other day the network got information about a certain document that provides a detailed report for the British government on the economic consequences of the COVID-2019 pandemic. According to it, the UK economy will lose from 300 to 500 billion pounds, which is from a third to half of its GDP. Thus, on top of Brexit, the British economy may also face huge financial losses due to the epidemic, in which Britain suffers the greatest human losses among European countries.

GBP/USD – 4H.

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As seen on the 4-hour chart, the pound/dollar pair fall to the lower line of the sideways trend corridor, from which it rebounded for the first time, however, it is now making a new attempt to consolidate under it. Closing the pair’s exchange rate below this line will allow traders to expect a further fall in the direction of the corrective levels of 38.2% (1.2095) and 23.6% (1.1834). No indicator has any pending divergences today. The final rebound of the pair from the corridor line will work in favor of the British currency and the beginning of growth in the direction of the corrective level of 61.8% (1.2516).

GBP/USD – Daily.

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On the daily chart, the pair’s quotes fell to the corrective level of 38.2% (1.2215). The rebound from this level, combined with the rebound from the lower line of the corridor on the 4-hour chart, allows traders to expect a reversal in favor of the British currency and some growth in the direction of 1.2463. However, there is no release on this graph yet.

GBP/USD – Weekly.

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On the weekly chart, the pound/dollar pair performed a false breakdown of the lower trend line. Thus, until the pair’s quotes are fixed under this line, there is a high probability of growth in the direction of the top two trend lines, but in the long term.

Overview of fundamentals:

On Thursday, the UK hosted a speech by Bank of England Governor Andrew Bailey, in which he said that he was not going to reduce the key rate below zero. Jerome Powell, the Fed’s President, has previously made a similar statement. However, this speech by the BA President did not support the British, it still continued to fall yesterday in pair with the dollar.

The economic calendar for the US and the UK:

US – change of the volume of retail trade (14:30 GMT).

US – change in the volume of industrial production (15:15 GMT).

On May 15, the UK’s calendar of economic events is empty. In America, there are two relatively important reports on retail sales and industrial production, each of which may decline by 10%.

COT (Commitments of Traders) report:

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The latest COT report showed that professional market players were getting rid of long contracts (-3,252) and increasing short (+2,054). However, in general, all changes in the number of contracts in all groups of traders are minimal, no more than 4,000. Major players continue to prefer the euro to the pound. The “Commercial” group was mainly engaged in reducing short contracts, and in general, during the reporting week, both types of contracts lost only 600 units, that is, almost equal and at the same time the minimum number. In recent days, the British currency has clearly headed down, so the next COT report, which will be released today, may show a strengthening of the “bearish” mood among major players.

Forecast for GBP/USD and recommendations to traders:

I recommend selling the pound in the current conditions only after closing at 1.2184 (the lower line of the corridor) with the goals of 1.2095 and 1.1834. I recommend buying the British currency if it closes above the descending corridor on the hourly chart.

Terms:

“Non-commercial” – major market players: banks, hedge funds, investment funds, private, large investors.

“Commercial” – commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but to ensure current activities or export-import operations.

“Non-reportable positions” – small traders who do not have a significant impact on the price.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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