The GBP/USD pair also continued to move up on Friday, November 6, but much weaker than during the rest of the week. In general, over the past week, the pound fell quite strongly. The upward movement was not as uniform and strong as for the euro/dollar pair. Last Friday, the price reached the important resistance area of 1.3160-1.3184 and immediately rebounded from it, unable to overcome it. Therefore, this area is now the key area for traders. If it is overcome, then buyers may continue to put pressure on the pair, and the upward movement will continue. Otherwise (more likely), we expect the quotes to fall, at least within the framework of the correction to the upward trend line and the Kijun-sen line.
The linear regression channels are directed to the upside on the 15-minute timeframe, which fully corresponds to the nature of the pair's movement on the hourly chart on Friday. There are no signs of starting a downward correction yet, at the same time we clearly see two unsuccessful attempts to overcome the 1.3160-1.3184 area, which makes it possible to expect a reversal of the lower channel to the downside in the next few hours and the pound to fall further.
Take note that professional traders clearly could not decide on a single strategy for trading the British pound in the past few months. They either increase their net position (which indicates the strengthening of the bullish mood), then decrease it (which indicates the strengthening of the bearish mood). At this time, they began to increase the number of short positions, while closing the Buy-contracts (longs). So far, the total number of contracts for the "non-commercial" group is only decreasing, which, among other things, means that non-commercial traders are not too keen to have anything to do with the British currency. Given the purely British background, this is not surprising at all. It is completely unclear as to what will happen to pound in the coming months and in 2021. Thus, it is very, very difficult to make a forecast even for the next couple of weeks based on the Commitment of Traders (COT) report.
Last Friday's fundamental background for the pound was expressed by the same reports on NonFarm Payrolls and the US unemployment rate. And just like in the case of the euro/dollar pair, traders completely ignored this statistics, since they were focused on the political chaos that is now reigning in America. No significant news from the UK. Now we believe that traders should calm down regarding the US presidential elections, and the US dollar should slightly rise, at least as part of a correction. Also, traders can look back on Friday's statistics, which was supposed to support the dollar. But the further prospects for the British pound still look extremely vague. There is still no deal with the European Union, the lockdown will definitely affect the British economy. Therefore, we do not expect the pound to grow further at the moment. However, this is a hypothesis. If the area 1.3160 -1.3184 is overcome, then the pair may continue moving up. No major UK reports scheduled for Monday, but Bank of England Governor Andrew Bailey will deliver a speech.
We have two trading ideas for November 9:
1) Buyers for the pound/dollar pair cannot overcome the 1.3160 -1.3184 area, which prevents them from sustaining their upward movement. Also, the fundamental background from the UK is not on the side of the British pound. Thus, we recommend buying the pair only if bulls manage to overcome the indicated area, while aiming for the resistance level of 1.3253. Take Profit in this case will be up to 50 points.
2) Sellers do not currently own the initiative in the market. However, in case the price rebounds from the 1.3160 -1.3184 area, you can try to sell the pound/dollar pair while aiming for the Kijun-sen line (1.3032) in small lots, since we have an upward trend. Take Profit in this case can be up to 100 points. You can only take larger sales if we have gone beyond the trend line.
Hot forecast and trading signals for EUR/USD
Explanations for illustrations:
Support and Resistance Levels are the levels that serve as targets when buying or selling the pair. You can place Take Profit near these levels.
Kijun-sen and Senkou Span B lines are lines of the Ichimoku indicator transferred to the hourly timeframe from the 4-hour one.
Support and resistance areas are areas from which the price has repeatedly rebounded off.
Yellow lines are trend lines, trend channels and any other technical patterns.
Indicator 1 on the COT charts is the size of the net position of each category of traders.
Indicator 2 on the COT charts is the size of the net position for the "non-commercial" group.The material has been provided by InstaForex Company - www.instaforex.com