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Analysis of the trading week of March 28 - April 1 for the GBP/USD pair. COT report. Nobody was interested in Nonfarm.

Long-term perspective.


The GBP/USD currency pair has hardly changed in value during the current week. The week started at 1.3180 and ended at 1.3110. A decline of 70 points in a week is nothing for the pound. If the European currency managed to at least adjust this week against the background of "hopeful" geopolitics, then the pound sterling failed to demonstrate no desire to grow. Moreover, geopolitical or macroeconomic factors related only to the pound cannot be blamed for this. Geopolitical factors have the same effect on the euro and the pound, and macroeconomic factors this week supported the fall of the euro currency to a greater extent than the fall of the pound. As a result, in recent weeks, the British currency has not even managed to adjust to the critical line on the 24-hour TF, so there are even fewer questions about the further direction of movement than for the euro/dollar pair. Most likely, the pair will try to fall to the important Fibonacci level of 50.0% - 1.2830 in the coming weeks. By the way, it should be noted once again that despite the weakness of the pound this week, it is still much stronger than the euro in the confrontation with the dollar. At the moment, the pound has adjusted by 40% against the upward trend of 2020. The euro has adjusted by 90%. Thus, the pound is still showing great resistance against the dollar. In addition, the Bank of England is actively helping it, which has already raised the key rate three times and is going to tighten monetary policy further in 2022. Unlike the ECB. In general, if we take a medium-term perspective, then the chances of growth for the British currency are higher than for the European one. But at this time, both can continue to fall.

COT analysis.

The latest COT report on the British pound showed minimal changes in the mood of major players. For a whole week, the Non-commercial group opened only 700 sell contracts and closed 2.1 thousand buy contracts. Thus, the net position of non-commercial traders decreased by 3 thousand. Even for the pound, such changes are insignificant. In general, the Non-commercial group has almost 2.5 times more contracts for sale than for purchase. This means that the mood of professional traders is now "very bearish". Thus, this is another factor that speaks in favor of the continuation of the fall of the British currency. The situation with COT reports for the pound is completely different than for the euro. According to the pound, the mood of the major players changes every couple of months, and sometimes even faster. At this time, the "Non-commercial" net position has already fallen to the levels where the last round of the pound's fall ended (the green line on the first indicator). Thus, it can even be assumed that in the coming weeks, the pound will try to start a new ascent. However, much will again depend on geopolitics and technology. At the moment, the pound has a little more reason to grow than the euro. But there are plenty of factors of the fall.

Analysis of fundamental events.

There were practically no fundamental events in the UK this week. Only on Thursday, the final report on GDP for the fourth quarter was published, which turned out to be slightly better than previous estimates. Therefore, American macroeconomic statistics were much more likely to influence the course of trading. However, for the most part, it was ignored. For example, traders did not pay any attention to reports on GDP and ADP on Wednesday, on changes in personal income and expenses of Americans on Thursday, and on unemployment, wages, and Non-farm payrolls on Friday. On Friday, the ignoring of market participants of important events was especially strange, since unemployment in the United States has already fallen to 3.6%, and the number of new jobs outside the agricultural sector in March amounted to 431 thousand, which is only slightly worse than forecasts, but the value for February was revised upward. Therefore, in general, the report turned out to be neutral, but there was also strong data on unemployment and wages. However, the dollar managed to grow by a maximum of 30 points on this news, and over the next few hours, it lost all advantage.

Trading plan for the week of April 4 - 8:

1) The pound/dollar pair continues to adjust, but so far the correction is quite weak. Now the key level for the pair is 1.2830 (50.0% Fibonacci), on which the further long-term prospects of the pound depend. However, it still needs to be reached. So far, the pair have set their sights on the critical Kijun-sen line, but in three weeks they have not been able to work it out. If it is not overcome, then the fall of the British currency will resume with the goal indicated above.

2) But the prospects for an upward movement have deteriorated significantly and so far there is not a single reason to buy the pound. This is evidenced by the technique since even during the last round of growth, the price failed to update its previous local peak or overcome the critical line. This is evidenced by geopolitics since the pound remains a riskier currency than the dollar. This is indicated by macroeconomics since the economy in the UK is in a worse state than the economy in the US.

Explanations of the illustrations:

Price levels of support and resistance (resistance /support), Fibonacci levels - target levels when opening purchases or sales. Take Profit levels can be placed near them.

Ichimoku indicators (standard settings), Bollinger Bands (standard settings), MACD (5, 34, 5).

Indicator 1 on the COT charts - the net position size of each category of traders.

Indicator 2 on the COT charts - the net position size for the "Non-commercial" group.

Trading analysis offered by RobotFX and Flex EA.