GBP/USD 5-Minute Analysis

The GBP/USD currency pair attempted to correct on Monday but failed to consolidate above the critical line or the descending channel. Consequently, the downward trend in quotes may resume. It has already resumed, as Monday's second half saw a more substantial decline than the preceding rise. Thus, the latest correction may have ended before it even properly started. This outcome is not surprising, as we continue to believe that the British pound should only fall. Recently, there have been no news or events capable of altering the global fundamental backdrop. If that is the case, on what basis would the pound suddenly start to rise?

We expect the decline to resume, targeting the 1.2429–1.2445 area. If the price consolidates above the descending channel, above the Kijun-sen line, and above the 1.2605–1.2620 area, then we could talk about a somewhat stronger correction. However, that is not the case right now. On Monday, there were no significant news events in the U.S. or the U.K., leaving traders with little to react to during the day.

Nevertheless, Monday's trading signals were quite interesting. The price bounced twice from the 1.2599–1.2620 area, allowing traders to open short positions in both instances. Although the price failed to reach the nearest target level of 1.2516 in both cases, the pair could continue its decline today, as all major indicators still point downward. A Stop Loss can be moved to breakeven to protect against potential losses.

COT Report

COT (Commitment of Traders) reports for the British pound show that commercial traders' sentiment has fluctuated over the years. The red and blue lines representing the net positions of commercial and non-commercial traders constantly cross and are often close to the zero mark. The latest downtrend occurred when the red line was below zero. The red line is above zero, while the price has breached the important 1.3154 level.

According to the latest COT report for the British pound, the Non-commercial group closed 18,300 BUY contracts and 2,500 SELL contracts, resulting in a 15,800 reduction in the net position for the week.

The fundamental backdrop still offers no basis for long-term pound purchases, and the currency remains at risk of resuming its global downtrend. There is an ascending trendline on the weekly timeframe, meaning a long-term fall cannot yet be confirmed. However, while the pound tested this trendline, it has yet to break below it. A rebound and correction in the long term remain possible, but we expect this trendline to be breached, with further declines to follow.

GBP/USD 1-Hour Analysis

In the hourly timeframe, the GBP/USD pair maintains a predominantly bearish outlook, so further declines in the British currency should be expected, both significant and prolonged. The first correction turned out to be flat and is already complete. The new correction was also flat and has likewise concluded. There remain no fundamental reasons to anticipate strong growth for the British pound. The most recent inflation report from the U.K. offered no support for the pound.

For November 26, we highlight the following key levels: 1.2429–1.2445, 1.2516, 1.2605–1.2620, 1.2796–1.2816, 1.2863, 1.2981–1.2987, and 1.3050. The Senkou Span B (1.2803) and Kijun-sen (1.2599) lines may also serve as potential signal points. It is recommended to place Stop-Loss orders at breakeven once the price moves 20 pips in the right direction. Note that the Ichimoku indicator lines may shift during the day, which should be considered when identifying trading signals.

No major events are scheduled in either the U.K. or the U.S. for Tuesday, so the market will need to focus on technical analysis. We expect calm movements with a downward bias, though it should still be understood that the British pound could resume its collapse. We view the FOMC minutes as a secondary event and do not anticipate any significant market reaction to them.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Key areas where price movement might stall. Not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the H4 timeframe to the hourly chart, serving as strong levels.
• Extreme Levels (thin red lines): Points where the price has previously rebounded. They can serve as trading signal sources.
• Yellow Lines: Trendlines, channels, or other technical patterns.
• Indicator 1 on COT Charts: Reflects the net position size of each trader category.