Analysis of GBP/USD 5M
The GBP/USD currency pair made minimal corrections to the nearest support area on Thursday. There were no significant macroeconomic or fundamental events throughout the day, nor were there any geopolitical news. Reports on GDP and industrial production for February were published in the UK, but the market paid no attention to them. Both reports came out stronger than forecasted; however, the British currency continued to decline throughout the day. As a result, there was no reaction to the positive British data.
The last trading day of the week is unlikely to leave a significant mark for traders either. If a second round of negotiations between Iran and the U.S. begins today, it will likely conclude on Saturday. Therefore, geopolitical information will not be available until at least the first day of the weekend. Movements in the pair on Friday may again exhibit low volatility.
From a technical perspective, the upward trend remains intact. The market has stopped paying attention to all secondary news related to the Middle East. Thus, the market's reaction to geopolitics is now only to be expected with genuinely important news, of which there is none at this moment. Today, the second round of negotiations between the U.S. and Iran may take place. We are quite skeptical about this, but if the parties take even very small steps toward each other, it's still better than a resumption of war. However, the market has already priced in the de-escalation scenario.
On the 5-minute timeframe, a single selling signal formed on Thursday, yielding no significant profits but not a false signal. The price consolidated below the 1.3533-1.3548 area, allowing traders to open shorts. However, volatility throughout the day was very low. The trade can be carried over to Friday.
COT Report
The COT reports for the British pound show that, in recent years, commercial traders' sentiment has been constantly changing. The red and blue lines representing the net positions of commercial and non-commercial traders frequently cross each other and are usually close to the zero mark. Currently, the lines are diverging, with non-commercial traders still dominating with... sell positions. However, given the events in the Middle East, it is not surprising that demand for riskier currencies is falling while demand for the dollar is rising.
In the long term, the dollar continues to decline due to Donald Trump's policies, as shown on the weekly timeframe (illustration above). The trade war will continue in one form or another for a long time, but geopolitical factors currently take precedence, providing strong support to the US dollar. According to the latest COT report (from April 7), the "Non-commercial" group closed 3,900 buy contracts and 300 sell contracts. Thus, the net position of non-commercial traders decreased by 3,600 contracts over the week.
Analysis of GBP/USD 1H
On the hourly timeframe, the GBP/USD pair continues to form an upward trend, which could be negated if a full-scale war resumes in the Middle East. It is also important to note that the influence of geopolitics is weakening, as evidenced by this week's movements, although military actions in the region are currently on hold. The Strait of Hormuz remains blocked, but new peace negotiations between Washington and Tehran may commence this week.
For April 17, we highlight the following important levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3533-1.3548, 1.3615, 1.3671-1.3681, 1.3751-1.3763. The Senkou Span B line (1.3387) and Kijun-sen line (1.3487) may also serve as sources of signals. It is recommended to set the stop-loss order to breakeven after the price has moved in the right direction by 20 pips. The Ichimoku indicator lines may shift throughout the day, which should be taken into account when determining trading signals.
On Friday, no significant events or reports are scheduled in the UK or the U.S., so all market attention will be directed toward the negotiations between Iran and the U.S. We do not expect information to come before the market closes for the weekend, but anything is possible. Traders can react only to geopolitical developments today.
Trading Recommendations:
Today, traders may consider short positions if the price rebounds from the 1.3533-1.3548 area, targeting 1.3465-1.3480. Long positions can be opened with targets at 1.3615 and 1.3671-1.3681 if the price consolidates above the 1.3533-1.3548 area.
Explanations for Illustrations:
Support and resistance price levels are thick red lines around which the movement may end. They are not sources of trading signals.
The Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator, transferred to the hourly timeframe from the 4-hour timeframe. They are strong lines.
Extreme levels are thin red lines from which the price previously rebounded. They are sources of trading signals.
Yellow lines are trend lines, trend channels, and any other technical patterns.
Indicator 1 on the COT charts shows the size of the net position of each category of traders.
