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21.09.202014:19 Forex Analysis & Reviews: GBP/USD. September 21. COT report: speculators open short contracts

GBP/USD – 1H.

Exchange Rates 21.09.2020 analysis

According to the hourly chart, the quotes of the GBP/USD pair performed a reversal in favor of the US currency and a new close under the ascending trend line and the corrective level of 127.2% (1.2937). Thus, traders can again count on a slight drop in quotes in the direction of the corrective level of 161.8% (1.2789). Since September 10, the pound/dollar pair has been trading in a rather weak trend. It seems that there is an upward slope, on the other hand, it is too weak and fuzzy. The Briton showed that it is difficult to show growth at this time, and bull traders showed that they do not want to buy the pound after the events of early September, after which the strongest fall in the British quotes began. Now, as strange as it sounds, Boris Johnson and the UK government need to fix the situation. Ursula von der Leyen, President of the European Commission, said that London had called its reputation into question and must now restore it. She said that no new deal (meaning a trade agreement) is out of the question if London easily violates the previous agreement. Thus, the British can resume growth if London really shows that it is not going to violate the Brexit agreement. Otherwise, relations between Brussels and London will become very complicated. Further, the British will be affected.

GBP/USD – 4H.

Exchange Rates 21.09.2020 analysis

On the 4-hour chart, the GBP/USD pair performed an increase to the corrective level of 38.2% (1.3010), a reversal in favor of the US dollar, and began the process of falling in the direction of the Fibo level of 50.0% (1.2867). In general, the last few days of trading are between the levels of 50.0% and 38.2%. Thus, here again, we have the similarity of a flat. Closing the pair's rate above the level of 38.2% will work in favor of resuming growth in the direction of the Fibo level of 23.6% (1.3010). Closing quotes below the Fibo level of 50.0% will increase the probability of a further fall in the direction of the corrective level of 61.8% (1.2720).

GBP/USD – Daily.

Exchange Rates 21.09.2020 analysis

On the daily chart, the pair's quotes performed a rebound from the Fibo level of 76.4% (1.2776), which now allows traders to expect some growth in the direction of the corrective level of 100.0% (1.3199). Fixing quotes under the Fibo level of 76.4% will work in favor of the US currency and fall in the direction of the corrective level of 61.8% (1.2516).

GBP/USD – Weekly.

Exchange Rates 21.09.2020 analysis

On the weekly chart, the pound/dollar pair closed under the lower downward trend line, so a false breakout of this line followed earlier. The pair returns to a downward trend.

Overview of fundamentals:

On Friday, the UK released a report on retail trade for August, which almost exactly met market expectations and did not cause a special reaction from traders.

News calendar for the US and UK:

US - speech by Jerome Powell (14:00 GMT).

On September 21, no news was listed on the calendar of the UK.

COT (Commitments of Traders) report:

Exchange Rates 21.09.2020 analysis

The latest COT report on the British pound, released last Friday, turned out to be much more logical than the previous one. This time, the report showed that the "Non-commercial" group reduced the number of long contracts on its hands by 4,547 units and opened 7,013 short contracts. Thus, the mood of the most important group (the group of professional speculators) became more "bearish" during the reporting week. Given that the British pound has fallen by 700 points since September 1, this behavior of the "Non-commercial" group is logical. The "Commercial" group (hedgers) managed to close about 80,000 contracts during the reporting week, in equal shares of short and long. For comparison, 80,000 contracts are more than the total number of contracts currently in the hands of speculators. Thus, the attractiveness of the British in the eyes of major traders begins to decline quite strongly.

Forecast for GBP/USD and recommendations for traders:

I recommend selling the British currency with a target of 1.2720 if the close is made under the level of 50.0% (1.2867) on the 4-hour chart. I recommend opening purchases of the British dollar if a close is made above the level of 1.3010 on the 4-hour chart, with a target of 1.3191.

Terms:

"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but for current activities or export-import operations.

"Non-reportable positions" - 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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