GBP/USD 5-Minute Analysis
On Monday, the GBP/USD currency pair again showed an upward movement despite having no reason. The market continues to buy the British pound purely out of inertia, much like Bitcoin. Bitcoin often rises simply because everyone is buying it, hoping it will be worth millions. The same logic applies to the pound—the exchange rate rises, so traders keep buying, which fuels further growth. There were no significant events in the UK on Monday, and the only report from the U.S. supported the dollar. However, even a minimal strengthening of the U.S. currency did not occur. Donald Trump did not introduce new tariffs or sanctions that day, but that did not help. After a short pause, the British currency resumed its growth as if nothing had happened. Looking for logic in the current movements is pointless.
From a technical standpoint, on the hourly timeframe, one uptrend is replaced by another uptrend. It sounds paradoxical, but that's the reality. There are no corrections, not even minimal ones. The pound rises on days when there are fundamental reasons for it and on days when there are none. It's a one-sided movement.
Despite the lack of logic in Monday's movements, there were still good profit opportunities. The only trading signal of the day formed right at the market opening at night when the price rebounded from the critical line. However, when the European session began, the price was already very close to the Kijun-sen line, meaning traders could have entered long positions slightly later. By evening, the pound was trading in the 1.2981-1.2987 area, where profits from long positions could have been secured. The pound's growth may well continue even higher.
COT Report
COT reports on the British pound indicate that sentiment among commercial traders has been fluctuating over recent years. The red and blue lines, which represent the net positions of commercial and non-commercial traders, frequently intersect and typically hover around the zero mark. Currently, they are close to each other, suggesting a roughly equal number of buy and sell positions.
On the weekly timeframe, the price initially broke through the 1.3154 level before dropping to the trend line, which it subsequently breached. This break suggests that the pound is likely to continue its decline. However, there was also a rebound from the second-to-last local low on the weekly chart, indicating that the market might be entering a period of sideways movement.
According to the latest report on the British pound, the non-commercial group opened 12,900 BUY contracts and 2,300 SELL contracts. Consequently, the net position of non-commercial traders increased by 10,600 contracts over the week.
The fundamental background still does not provide justification for long-term purchases of the British pound. The currency may continue its global downward trend. While the pound has risen significantly in recent times, this increase can be attributed largely to Donald Trump's policies.
GBP/USD 1-Hour Analysis
On the hourly timeframe, the GBP/USD pair maintains an uptrend, having spent several days in a flat movement before now targeting a resumption of growth. A correction on the daily timeframe is long overdue. We still do not see any justification for the pound's growth in the long term. The only factor supporting the British currency is Donald Trump, who imposes sanctions and tariffs indiscriminately. And even when no new sanctions are introduced, the dollar still falls. The market is ignoring all other factors.
For March 18, we highlight the following key 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 (1.2760) and Kijun-sen (1.2949) lines may also serve as sources of trading signals. Setting a Stop Loss at breakeven is recommended once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift throughout the day, which should be considered when determining trade signals.
On Tuesday, no significant events are scheduled in the UK, while in the U.S., the most important release will be the industrial production report. Regardless of its outcome, it is unlikely to strengthen the U.S. dollar as the market continues to ignore all news supporting the U.S. currency.
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.
