GBP/USD – 1H.
According to the hourly chart, the GBP/USD pair continued to move in the pendulum mode on Tuesday. The movements in different directions are absolutely the same in size. At first, the pair's quotes increased just above the level of 50.0% by 50 points, and then the same fall. As a result, this morning, the pair was again above the corrective level of 50.0% (1.3909), which slightly increases the probability of further growth of quotes in the direction of the next Fibo level of 61.8% (1.3989). However, look at the strength of the pair's movements in the last couple of days. With such activity of traders, the pair will grow to the level of 61.8% a week. No rebound or closing above the 50.0% level was a strong signal. Because over the past two days, a side corridor of 1.3881-1.3935 has formed, from which traders cannot get out yet. However, today, the pair may still leave this corridor, as there will still be one report in the US that deserves attention and to be worked out by traders.
I have already talked about the ADP report, and this is the first important report this week. In the UK, the information background remains zero. No interesting information is received. The fourth wave of coronavirus continues to fade (which is good), and the negotiation process with the European Union regarding the Northern Ireland protocol continues, but without much progress. In general, all this news does not affect the pound. Therefore, I believe that the ADP report today may cheer up traders a little. They will be ready tomorrow for serious trading when the Bank of England announces the results of its meeting, as well as updated forecasts for economic indicators and its vision of monetary policy for the next few months. Let me remind you that traders are waiting for specific statements from the Bank of England about the timing of completing the quantitative stimulus program. They expect that more than one (who has already left the committee) will vote to change the QE program. In this case, the British can resume the growth process. Otherwise, it is necessary to continue the fall, which began last week and is still very weak.
GBP/USD – 4H.
The GBP/USD pair on the 4-hour chart performed a fall to the corrective level of 23.6% (1.3870). The formation of a bullish divergence at the CCI indicator and the rebound from this level allows us to count on the resumption of growth in the direction of the 1.4003 level. Closing the pair's exchange rate under the corrective level of 23.6% will work in favor of the US currency and continue falling towards the next Fibo level of 38.2% (1.3642).
News calendar for the USA and the UK:
UK - PMI index for the service sector (08:30 UTC).
US - change in the number of employees from ADP (12:15 UTC).
US - PMI index for the service sector (13:45 UTC).
US - ISM index of business activity in the service sector (14:00 UTC).
On Wednesday, the calendars of economic events in the UK and the US contain interesting entries. However, the greatest attention of traders will be paid to one report – the ADP report, which will show how many jobs were created in the private sector of the US economy.
COT (Commitments of Traders) report:
The latest COT report on July 27 for the British showed that the mood of major players remains "bearish." During the reporting week, speculators closed 1,485 short contracts and opened 429 long contracts. As we can see, the changes are small, but the mood has become a little more "bullish." At the moment, the total number of contracts among all categories of traders is almost the same – 180-182 thousand each. The number of short contracts in the "Non-commercial" category of traders is also approximately equal to that of long contracts. Thus, judging by the COT reports, there is a global trend change for the British dollar, but at the same time, the full balance is maintained at this time. However, the pound is still more inclined to grow, and the chances of a new strong fall are purely theoretical. In the near future, major players may start repurchasing the pound.
GBP/USD forecast and recommendations for traders:
Today, you should continue to buy the pair, as a rebound was made from the level of 1.3870 on the 4-hour chart with the targets of 1.3989 and 1.4003 on the hourly chart. I recommend selling the pound if there is a rebound from the level of 1.4003 on the 4-hour chart with a target of 1.3909.
"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.
"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy foreign currency, not for speculative profit, but to ensure current activities or export-import operations.
"Non-reportable positions" are small traders who do not have a significant impact on the price.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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