The GBP/USD pair surprisingly edged higher on Tuesday. Volatility was naturally very low, but nevertheless, the pound sterling moved from the day's low to its high by about 60 points. Along the way, it even formed several good trading signals.
Thus, even on a muted day with no economic data scheduled in the calendar, the market found reasons for long positions on the pound. Therefore, we can quite expect the upward movement to be ignited, as GBPUSD has been in a prolonged uptrend since October 2022.
This trend has been driven by momentum, and the pound's growth is groundless. However, keep in mind that the market can push the pair in any direction even without justifications. Two buy signals materialized during the European trading session. First, the pair overcame the level of 1.2693, and then rebounded from it from above, duplicating the buy signal. At the beginning of the US session, it reached the Senkou Span B line (twice), that is, a sell signal was formed.
Therefore, long positions needed to be closed and short ones opened. There were no more signals for the rest of the day, so shorts should have been closed manually closer to the evening. Both deals turned out to be profitable, with a total profit of about 35 points. COT report: According to the latest report, non-commercial traders opened 2,800 long positions and closed 2,500 short ones.
The net position increased by 5,300 in just a week and continues to grow. Over the past 9-10 months, the net position has been on the rise.
We are approaching a point where the net position has grown too much to expect further growth. We assume that a prolonged bear run may soon begin, even though COT reports suggest a bullish continuation. It is becoming increasingly difficult to believe in it with each passing day. We can hardly explain why the uptrend should go on. However, there are currently no technical sell signals.
The pound has gained about 2,500 pips. Therefore, a bearish correction is now needed. Otherwise, a bullish continuation would make no sense. Overall, non-commercial traders hold 52,300 sell positions and 104,400 long ones. Such a gap suggests the end of the uptrend. We do not see the pair extending growth in the long term.
