Forecast and trading signals for GBP/USD on May 6. Analysis of the previous review and the pair's trajectory on Thursday - Kakiforex.com - Financial Market Media No. 1 in the World Forecast and trading signals for GBP/USD on May 6. Analysis of the previous review and the pair's trajectory on Thursday Forecast and trading signals for GBP/USD on May 6. Analysis of the previous review and the pair's trajectory on Thursday
InstaForex

May 6, 2021

Forecast and trading signals for GBP/USD on May 6. Analysis of the previous review and the pair's trajectory on Thursday

 The GBP/USD pair began to trade in a rather indistinct and certainly unprofitable manner on Wednesday, May 5. Last Friday and this Monday were just perfect days to work with the pound/dollar pair. The traffic was already worse on Tuesday, and then it completely deteriorated on Wednesday. On the 5-minute timeframe, you can clearly see that the price either trades in an open horizontal channel 10 points wide, then breaks out of it and goes up 50 points, then pulls back to 40, and all this with minimal influence of macroeconomic statistics. In fact, only two signals were formed yesterday - both through rebounds from the Kijun-sen line. However, if the first was clear but false, then the second was fuzzy and false. Moreover, during the formation of the second signal, the pair managed to settle below the critical line, thus, there were even three signals and all were false. None of the immediate target levels have been met. Stop Loss at breakeven could be set only on the last third deal, which did not make sense to open after two false buy and sell signals had already formed near the critical line. In total, for two false signals, traders could get a loss of 34 points. Remember that we managed to earn quite decent sums last Friday and this Monday. Therefore, there is no need to be upset, especially since the pound is now being traded in such a way that one would like to close the chart altogether and not look at it for a month or two. Also, take note that the price fell short of reaching the resistance level of 1.3927 by 2 points, and a point to the Kijun-sen line during the US session. Therefore, it wasn't a stroke of bad luck yesterday.


As for macroeconomic reports, there weren't any important data in the UK, and reports from America provoked a rather weak reaction. Markets reacted to the ADP report with a 30-point increase in the dollar. On the ISM index in the service sector - the dollar fell by 25 points. Take note that parliamentary elections will be held today in Scotland, which can greatly affect the composition of the UK, as well as its economy, geopolitics, size of territories and legislation. After all, Scotland wants to leave the United Kingdom and return to the EU. Therefore, the markets might be very nervous today and tomorrow, which can result in even more complex movements in the pound.


Yesterday, the pound/dollar pair spent the entire day in a narrow price range on the hourly timeframe, at around 30 points. Now the chart shows that the price was between the Kijun-sen and Senkou Span B lines, however, these lines were located in other places a few days earlier, so it was impossible to work on them. It turns out that these lines were a little late in moving to their current positions. The formal descending channel still remains relevant, but does little in trading and forecasting. Unless the price will bounce off its upper line in the near future. In general, the "swing" mode remains for the pound, and practically on all timeframes. We still believe that this week the pair can calmly go back to moving down by 200 points within the swing from the 4-hour timeframe. Therefore, we can go back to paying attention to the most important levels and lines: 1.3835, 1.3886 and 1.3975, as well as the Kijun-sen (1.3882), Senkou Span B (1.3915) lines. You are advised to set the Stop Loss level at breakeven when the price passes 20 points in the right direction.


Today, the UK is set to publish the April Service PMI and this report, no matter how ridiculous it sounds, may become the most important event of the day, despite the fact that the Bank of England meeting will be summed up a little later. We do not expect any important decisions from the central bank, no changes in rhetoric or monetary policy, and none from BoE Governor Andrew Bailey at all.


We also recommend that you familiarize yourself with the forecast and trading signals for the EUR/USD pair.


The GBP/USD pair fell by 90 points during the last reporting week (April 20-26). The last few Commitment of Traders (COT) reports have shown that the mood among professional players is becoming more bullish again, but in general they themselves do not know what to do with the pound in the past year. Look at the first indicator in the chart. The green line is the net position of the non-commercial group of traders. It constantly changes the direction of movement, intersects with the red line (net position of the commercial group). In general, it is now impossible to predict the pair's succeeding movement based on COT reports. The pound rose in value against the dollar from October to March, although the green and red lines showed no trend at that time.


Major players closed 1,100 buy contracts (longs) and got rid of 5,000 sell contracts (shorts). Thus, their net position increased by 3,900 contracts, and the mood became more bullish again. In general, it also remains bullish, since the total number of buy contracts from professional players exceeds the total number of sell contracts twice. And so, of course, we can expect the pound to rise further, but we still believe that the swing will continue at this time. Too many conflicting factors are at the disposal of the markets. Constant changes in the direction of movement of the green line indicate that big players do not know what to do with the pound in the long term.