Turbulence in GBP/USD Pair: Chart Analysis and Market Outlook
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On the hourly chart, the GBP/USD pair reversed in favor of the US currency on Wednesday, consolidating below the corrective level of 38.2% (1.2477). However, this closure has not given bears anything, as today, the pair has returned to the zone between 1.2477 and 1.2513. If a rebound occurs from this zone, there is a high probability that the quote decline will resume toward the corrective level of 23.6% (1.2321). Closing above this zone will allow traders to expect a resumption of growth towards the Fibonacci level of 50.0% (1.2603).
The wave situation has become simpler and clearer. Waves still have a relatively large size, which adds inconvenience to trading. However, the trend is currently "bullish," and a breakthrough of the last low at 1.2372 is required to complete it. In this case, there will be signs of the pair transitioning to a "bearish" trend, which is more logical after a fairly strong rise. However, at the moment, the "bullish" trend persists, and bears cannot firmly establish themselves on the hard-won positions.
Late Tuesday evening in the US, the minutes of the last FOMC meeting were released. The report stated that the regulator would continue to make decisions based on incoming information. FOMC members almost unanimously agreed that tightening monetary policy should only continue in the case of unsatisfactory inflation dynamics. Not all policymakers are confident in a sufficiently restrictive policy to return inflation to 2%. None of the FOMC members voted for an increase or decrease in the interest rate. Thus, the Fed has again "left the door open" but has not provided any signals about future decisions. Inflation in the US decreased in October, which may further weaken the "hawkish" sentiment.
On the 4-hour chart, the pair reversed in favor of the pound and a new consolidation above the level of 1.2450. Thus, the growth process can be continued toward the next level at 1.2620. The upward trend corridor characterizes traders' sentiment as "bullish," and the "bullish" divergence on the CCI indicator warns of a possible continuation of the rise.
Commitments of Traders (COT) Report:
The sentiment of the "Non-commercial" trader category for the last report is slightly less "bearish." The number of long contracts in the hands of speculators decreased by 6180 units, and the number of short contracts decreased by 10299 units. The overall sentiment of major players has long changed to "bearish," between the number of long and short contracts, the gap is increasing, but now in the opposite direction: 57 thousand versus 74 thousand. There are still excellent prospects for the pound to continue falling. I do not expect a strong rise in the pound soon. Over time, bulls will continue to get rid of buy positions, as is the case with the European currency. The growth we have seen in recent weeks is corrective.
News Calendar for the US and the UK:
UK - Manufacturing Purchasing Managers' Index (PMI) (09:30 UTC).
UK - Services Purchasing Managers' Index (PMI) (09:30 UTC).
On Thursday, the economic events calendar contains only two fairly interesting entries. The impact of the information background on market sentiment today may be weak.
Forecast for GBP/USD and Trader Tips:
I recommend selling the pound this week on a rebound from the zone of 1.2477– 1.2513 on the hourly chart with a target of 1.2321. Or on a rebound from the level of 1.2603. I advised buying the pair on a consolidation above the level of 1.2513 with targets of 1.2603 and 1.2620, but such deals look excessively risky to me. They should be closed at the first sign of doubt.
