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09.12.2024 03:41 AM
On Friday, the GBP/USD pair continued its upward movement overall despite recording a slight decline by the end of the day. However, the hourly timeframe now clearly displays an ascending trendline, confirming the continuation of the corrective movement. Until the price consolidates below this trendline, there is little point in discussing the resumption of the downtrend, which began two and a half months ago and could persist for much longer.
In the medium term, we expect the British currency to decline further. The reasons for this have been outlined repeatedly and remain unchanged. While specific reports or events may temporarily support the pound and prompt corrections, the broader fundamental backdrop remains unfavorable. On Friday, mixed macroeconomic data from the US provoked similarly mixed market reactions. However, over the past week, the pound sterling mostly rose. The data released in the US wasn't so poor as to justify a week-long decline in the dollar, leading us to conclude that the pair's growth primarily reflects a technical correction before resuming its downtrend.
One trading signal was generated on Friday, but it was challenging to execute due to its timing, which coincided with the release of US reports. Given the mixed nature of the reports, predicting the price rebound from the 1.2796–1.2816 area was difficult. Nevertheless, the price did rebound from this area and subsequently experienced a significant drop, which could continue this week. Even if trades were closed on Friday, they yielded approximately 50 pips in profit.
COT reports for the British pound reveal that the sentiment among commercial traders has fluctuated significantly over the past years. The red and blue lines representing net positions of commercial and non-commercial traders frequently cross and typically remain near the zero mark. The price has broken through the 1.3154 level and subsequently approached the trendline. We believe the trend has shifted to bearish, and further consolidation below the trendline is anticipated.
The latest COT report shows that the "Non-commercial" group closed 400 BUY contracts and opened 1,900 SELL contracts. As a result, the net position of non-commercial traders decreased by 2,300 contracts over the week.
The fundamental backdrop does not justify long-term purchases of the pound sterling. The currency has a genuine chance to resume its broader downtrend. While the trendline has thus far prevented further declines, failure to breach it could lead to a new upward wave, potentially pushing the pound above 1.3500. However, what fundamental basis exists for such growth at the moment?
On the hourly chart, GBP/USD maintains its bearish outlook while correcting upward. Aside from technical corrections, we still see no basis for sustained growth in the pound. However, the pound's remarkable resilience remains evident, as it rises even when the euro stagnates or no upward movement is warranted.
For December 9, we highlight the following important levels: 1.2429-1.2445, 1.2516, 1.2605-1.2620, 1.2796-1.2816, 1.2863, 1.2981-1.2987, 1.3050. Senkou Span B (1.2616) and Kijun-sen (1.2716) lines can also be sources of signals. These Ichimoku lines are strong signals and should be monitored throughout the day as they may shift. Setting a Stop Loss at breakeven once the price moves 20 pips in the right direction is recommended to mitigate potential losses from false signals.
No significant events or macroeconomic reports are scheduled for Monday in the US or the UK. As a result, we expect a relatively uneventful start to the trading week. However, following Friday's US labor market data and ahead of the inflation report on Wednesday, the dollar's strengthening could continue. Meanwhile, the trendline leaves little room for upward movement.
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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
