Tuesday, November 10, 2020

GBP/USD on November 10. COT report. Analysis of Monday deals. Recommendations for Tuesday

 The GBP/USD pair also reached the important resistance area of 1.3160 -1.3184 on Monday, November 9 and, just like the euro, it also failed to go beyond this area during the day. Therefore, the pound could also fall. Although, unlike the euro/dollar, the pound has an ascending trend line, which supports those who are trading on the rise, and the sterling did not sharply fall as well. Oddly enough, the fundamental background is more inclined to the pound's decline. Nevertheless, buyers remain in the game and they need to go beyond the 1.3160 -1.3184. The only way they could move up is if they do so. Sellers had the opportunity to open short positions yesterday, but this did not bring them a big profit, since the price could not move far down. However, we recommended trading in small lots, as the price continues to be above the trend line, as well as above the important Kijun-sen and Senkou Span B lines. This means that the trend remains upward.


The linear regression channels are directed sideways and to the upside on the 15-minute timeframe, which indicates that there are no signs of starting a downward movement. You can even say that most of the previous day's trading took place in a horizontal channel. Therefore, the lower timeframe does not provide any reason to conclude that the upward trend is over.


The GBP/USD pair only lost 100 points during the last reporting week (October 27-November 2). The pound began to rise after November 2. And it wasn't so much of a rise, but more like the dollar's fall. However, let's go back to the reporting period. Non-commercial traders closed 3,281 Buy-contracts (longs) and opened 1,146 Sell-contracts (shorts). Thus, the net position for the "non-commercial" group of traders decreased by 4,500. This is much more clearly visible on the chart of the first indicator. The green and red lines, which represent the net positions of the two most important groups of traders, began to diverge in different directions. Therefore, the mood of professional traders is becoming more bearish again. However, this change did not result in the pound's decline. Because elections were already held in the United States on November 3 and the dollar was only getting cheaper then. Therefore, the new Commitment of Traders (COT) report may show that the bearish mood is weakening among professional traders. However, in any case, we believe that the markets need to calm down and only after that will it be possible to look at all the information in a new way. It is now clear that market participants are in a very agitated state due to the political chaos that is now present in the United States. Therefore, the mood of large traders can change quickly and dramatically.


Fundamental background was practically absent for the pound/dollar on Monday. Bank of England Governor Andrew Bailey and the representative for monetary policy of the Bank of England Andy Haldane were scheduled to speak, but they did not mention anything interesting. In principle, they could not disclose anything important, since a BoE meeting also took place last week, during which important decisions were made, as well as worsened forecasts for the recovery of the British economy. Traders expect further easing of monetary policy and a transition to negative interest rates. Therefore, the market did not expect anything hawkish from Bailey.


Several important reports from the UK are scheduled for Tuesday. Firstly, this is the unemployment rate for September, which, according to experts, will grow from 4.5% to 4.8%. Secondly, applications for unemployment benefits, the number of which may reach 36,000. Thirdly, the average salary, including bonuses and without them, which can grow by 1.1%-1.5%. However, the market is currently paying more attention to political news from America than to economic news, wherever it comes from. And so, traders can ignore all of these reports from the UK. No scheduled macroeconomic reports from America. We advise you to monitor news related to the topic of the US presidential election. They will form the fundamental background for the pair in the coming days and weeks.


We have two trading ideas for November 10:


1) Buyers for the pound/dollar pair cannot overcome the 1.3160 -1.3184 area, which prevents them from continuing their upward movement. However, at the same time, they do not stray far from this area and will continue to test it for strength. Thus, we recommend buying the pair only if bulls manage to overcome the indicated area, while aiming for the resistance level of 1.3266. Take Profit in this case will be up to 60 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 currently have an upward trend. Take Profit in this case can be up to 100 points. You can confidently open sell positions after breaking the trend line and Senkou Span B line (1.2995) with the targets at the support level 1.2943 and the 1.2856-1.2874 area.