The GBP/USD currency pair failed to overcome the 1.3276 level on Wednesday and, bouncing off it three times, began an upward correction that lasted all day. In general, the pound has not experienced the best days. Thus, a correction was brewing. However, hardly anyone in the current circumstances could accurately predict when it would begin. A strong correction signal was formed yesterday, as the price failed to overcome the level of 1.3276 for the second time (globally). A "double bottom" pattern has formed, which is a pretty strong signal to buy. At the same time, we note that the macroeconomic or fundamental background has nothing to do with what is happening on the market today. We can only note Federal Reserve Chairman Jerome Powell's speech in the afternoon, to which the pound reacted much more modestly than the euro. All other reports and news of the day did not provoke any reaction.
Now as for trading signals. As already mentioned, the pair bounced off the 1.3276 level three times during the European trading session, thereby forming three buy signals. It was possible to enter the market with long positions on any of them. As a result, the pair grew during the day and by the end of the day it hit the 1.3367 level, near which it was possible to take profits. It was possible to earn about 60 points on this deal. The sell signal about a rebound from the 1.3367 level should not have been worked out, since it was formed too late. The same applies to the next buy signal about overcoming the level of 1.3367.
The latest Commitment of Traders (COT) report on the British pound showed an increase in the bearish mood among professional traders. Last week, for the first time in several months, the number of long positions from the non-commercial group exceeded the number of short positions, but this picture was not observed for long. This week it already became known that non-commercial traders started closing longs again and their total number fell to 44,000, while the total number of shorts remained at 48,000. Thus, formally, the mood among the major players is bearish now. However, all events of a geopolitical nature were not included in the latest COT report. That is, the next COT report may show a much stronger change in the net position of each group of traders and a sharp change in mood. In addition, the first indicator in the chart above shows that the mood of commercial and non-commercial traders is now essentially "neutral", since both lines (red and green) are near zero. Thus, although in recent months there has been a tendency to reduce short positions and build up long ones, now there is a complete balance in the market, and geopolitics can affect the balance of power and may affect it in the next few weeks/months. Therefore, no conclusions can be drawn based on COT reports now. Or it doesn't make sense. Unfortunately, the whole world is in tension right now, and comprehensive sanctions will affect the global economy and the mood of traders and investors.
The "double bottom" pattern is even better visible on the hourly timeframe. Thus, the pair may try to reach the level of 1.3439 today. In general, the situation still depends on the geopolitical background. At least 80% percent. The 20% depends on strong fundamental and macroeconomic data, of which there are few now. We do not yet see the British pound much higher than current levels. We highlight the following important levels on March 3: 1.3170-1.3185, 1.3276, 1.3367, 1.3439, 1.3489, 1.3537, 1.3572. The Senkou Span B (1.3457) and Kijun-sen (1.3355) lines can also be signal sources. Signals can be "bounces" and "breakthroughs" of these levels and lines. It is recommended to set the Stop Loss level to breakeven when the price passes in the right direction by 20 points. The lines of the Ichimoku indicator can move during the day, which should be taken into account when determining trading signals. There are also support and resistance levels on the chart that can be used to take profits on transactions. Only one report on business activity in the service sector is scheduled for Thursday in the UK, which is highly likely to be ignored. The most important event of the day is Powell's speech in the US. Several macroeconomic reports will also be published in America, but they probably won't have much impact on the course of trading either. Although the ISM index may be of interest to traders.
