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07.10.202414:33 Analisis Forex & Kajian: GBP/USD. October 7th. The British Pound is Ready for a Correction

Relevance up to 08:00 UTC+00

On the hourly chart, the GBP/USD pair attempted to start a correction on Friday and even managed to consolidate above the 1.3151 level. However, the upward movement was short-lived, as the news flow from the U.S. brought bears back into the market, who were also prepared for a slight pause. The consolidation of quotes below the 1.3151 level indicates a decline toward the 127.2% corrective level at 1.3054. A rebound from this level will once again allow for a correction targeting 1.3151. The trend is shifting to "bearish."

Exchange Rates 07.10.2024 analysis

The situation with the waves raises no questions. The last completed upward wave on September 26 did not break the peak of the previous wave, while the currently forming downward wave easily broke below the low of the previous wave, which was at the level of 1.3311. Thus, the "bullish" trend is now considered complete, and the formation of a "bearish" trend has begun.

On Friday, as I mentioned, the information backdrop favored bearish traders again. The reports on payrolls and unemployment were much better than market expectations. 254,000 new jobs were created instead of the 140,000 anticipated by traders, and the values of the previous two reports were revised upward. Thus, the bears had all the necessary grounds to continue their attacks. However, this week, the market will closely monitor the upcoming inflation report. The pace of the Fed's monetary policy easing is very important, and inflation directly impacts it alongside the labor market and unemployment. Data on unemployment and the labor market allows the FOMC to conduct a more restrained easing and not rush. However, if inflation approaches the target level, it could tip the scales the other way. If inflation drops to 2.3% or below, the Fed may implement a 0.50% rate cut at the next meeting, putting pressure back on the U.S. dollar. This pressure is unlikely to be sufficient to overturn the newly forming "bearish" trend, but we could see a strong corrective wave.

Exchange Rates 07.10.2024 analysis

On the 4-hour chart, the pair has reversed in favor of the dollar and consolidated below the 76.4% corrective level at 1.3314. Thus, the decline process may continue toward the next level of 1.3044. No new emerging divergences are observed today, but in recent weeks, a sufficient number of "bearish" signals have been formed. A rebound from the 1.3044 level will allow for some growth, but it is crucial for bears to close below this level to continue the decline toward the Fibonacci level of 61.8% – 1.2745.

Commitments of Traders (COT) Report:

Exchange Rates 07.10.2024 analysis

The sentiment of the "Non-commercial" trader category in the last reporting week has become more "bullish." The number of long positions held by speculators increased by 6,144, while the number of short positions decreased by 629. Thus, for two weeks, professional players reduced their long positions and increased their short positions, but now they have returned to buying the pound. Bulls still hold a solid advantage. The gap between long and short positions is 93,000: 161,000 versus 68,000.

In my opinion, the prospects for the pound's decline remain, although the COT reports currently suggest otherwise. Over the past three months, the number of long positions has grown from 135,000 to 161,000, while the number of short positions has increased from 50,000 to 68,000. I believe that over time, professional players will start to offload their long positions or increase their short positions, as all possible factors for buying the British pound seem to have been exhausted. Technical analysis indicates that this process may begin very soon.

News Calendar for the U.S. and the U.K.:

On Monday, the economic events calendar contains no important entries. The influence of the information backdrop on market sentiment will be absent today.

Forecast for GBP/USD and Trader Tips:

Sales of the pair were possible when the hourly chart rebounded from the 1.3425 level, targeting 1.3357 and 1.3259. Both targets were met. A close below 1.3259 allowed traders to continue selling, targeting 1.3151. A close below 1.3151 targets 1.3054. All targets except the last one have been fulfilled. I believe that sales can be closed. Purchases will become possible upon a rebound from the 1.3054 level or from the 1.3044 level, targeting 1.3151.

Fibonacci level grids are constructed from 1.2892 to 1.2298 on the hourly chart and from 1.4248 to 1.0404 on the 4-hour chart.

* Analisis pasaran yang disiarkan di sini adalah bertujuan untuk meningkatkan kesedaran anda, tetapi tidak untuk memberi arahan untuk membuat perdagangan.

Samir Klishi,
Analytical expert of InstaSpot
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