03.04.202604:16 Forex Analysis & Reviews: Trading Recommendations And Transaction Analysis For GBP/USD On April 3. The British Pound Finds Itself at the Bottom Again

Analysis Of GBP/USD 5M

The GBP/USD currency pair also plunged on Thursday following Donald Trump's speech. There has already been much said about the speech, and frankly, there isn't much to discuss. Another series of contradictory statements regarding the situation in the Middle East caused traders to rush back to buy the dollar, anticipating new devastating strikes against Iran. How valid these expectations are is hard to say, but the market once again chose to play it safe. There was no macroeconomic background to speak of on Thursday, but in any case, it currently has no impact on the movement of the currency pair.

On the hourly timeframe, we are witnessing "roller coaster" movements, similar to those in the euro. The price is constantly changing direction, which perfectly reflects traders' sentiments. A trend can be identified at this time, but any trend is currently of little significance. The market is reacting only to geopolitics, and traders are not using technical benchmarks.

On the 5-minute timeframe, two trading signals were formed on Thursday. During the European trading session, the pair consolidated below the 1.3201-1.3212 area, and during the American session, it moved back above this area. However, the major movements occurred during the Asian trading session, when Trump's much-discussed speech took place. As a result, traders may have opened two trades yesterday, neither of which yielded a profit.

COT Report

The COT reports for the British pound show that commercial traders' sentiment has been changing steadily in recent years. The red and blue lines, which depict the net positions of commercial and non-commercial traders, frequently cross each other and are often close to the zero mark. Currently, the lines are moving further apart, with non-commercial traders still predominantly holding... short positions. However, given the events in the Middle East, it is no longer surprising that demand for risk 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, and the Fed is certainly closer to resuming monetary policy than the ECB or the Bank of England, given Trump's ongoing pressure and the leadership change in May. However, geopolitical factors currently take precedence, providing strong support for the US currency. According to the latest COT report (dated March 24), the "Non-commercial" group opened 2,200 BUY contracts and closed 4,900 SELL contracts. Thus, the net position of non-commercial traders increased by 7,100 contracts over the week.

Analysis Of GBP/USD 1H

On the hourly timeframe, the GBP/USD pair has switched to forming yet another downward trend, which could also be canceled soon. The market continues to closely monitor events in the Middle East, which account for 90% of market movements. Despite the significant decline of the pair in February-March, we still perceive it as a correction, in the long-term perspective (weekly timeframe). The daily timeframe confidently signals the maintenance of an upward trend. Geopolitics continues to dominate the currency market.

On April 3, we highlight the following important levels: 1.3096-1.3115, 1.3201-1.3212, 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 (1.3345) and Kijun-sen line (1.3251) may also serve as sources of signals. It is recommended to set a Stop Loss at breakeven if the price moves in the correct direction by 20 pips. The lines of the Ichimoku indicator may move during the day, which should be considered when determining trading signals.

On Friday, there are no major events or reports scheduled in the UK, while in the US, crucial Non-Farm Payroll reports and unemployment rates will be released, which could provoke another market storm. If the pair surges by the same 150 pips today, we wouldn't be surprised.

Trading Recommendations:

Today, traders may consider short positions if the price bounces off the Kijun-sen line, targeting 1.3201-1.3212 and 1.3096-1.3115. Long positions can be reopened with a target of 1.3345 if the price consolidates above the Kijun-sen line.

Explanations For Illustrations:

• Support and resistance price levels – thick red lines around which movement may end. They are not sources of trading signals.
• Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator transferred from the 4-hour timeframe to the hourly timeframe. They are strong lines.
• Extreme levels – thin red lines from which the price previously bounced. They are sources of trading signals.
• Yellow lines – trend lines, trend channels, and any other technical patterns.
• Indicator 1 on COT charts – the size of the net position for each category of traders.