GBP/USD 5-Minute Analysis

On Tuesday, the GBP/USD currency pair made another attempt to continue its local upward trend. In contrast to the euro, the British pound has demonstrated a genuine upward correction in recent weeks. Several factors have supported the pound's growth, and it has capitalized on any opportunity to rise. When UK economic data was positive, the pound moved up enthusiastically. Additionally, if the euro was gaining, the pound seemed to feel justified in doing the same. However, with the euro potentially starting a new decline, we are also preparing for a possible drop in the British currency.

On Tuesday, there were no significant developments in either the UK or the US, as has been the case for most of this week. Without any major market events, the price has remained in a sideways range on the hourly timeframe for several days. While the euro is being supported by a trendline, the pound finds support in the 1.2605-1.2620 zone. A break below this area could indicate the beginning of a local downward trend.

Only one trading signal was generated for the British currency yesterday. Recently, volatility has decreased, making it unsurprising that trading signals have also become less frequent. During the European trading session, the price rebounded from the 1.2605-1.2620 area, resulting in a rise of 40-50 pips. Although the price did not reach its nearest target, traders had the opportunity to manually close the trade with a small profit at any time.

COT Report

COT reports for the British pound reveal that the sentiment among commercial traders has been shifting consistently in recent years. The red and blue lines, representing the net positions of commercial and non-commercial traders, often cross and generally hover around the zero mark. Currently, these lines are once again close to each other, indicating an almost equal number of long and short positions.

On the weekly timeframe, the price initially broke through the 1.3154 level before declining toward the trendline, which it successfully breached. This breach suggests that the pound's decline is likely to continue. However, there was also a rebound from the previous local minimum on the weekly timeframe, which may indicate a flat market.

According to the latest COT report on the British pound, the non-commercial group opened 4,500 buy contracts and 1,800 sell contracts. As a result, the net position of non-commercial traders increased by 2,700 contracts over the week, which does not significantly benefit the pound.

The fundamental background still does not provide any justification for long-term purchases of the pound sterling, and the currency remains at risk of continuing its global downtrend. This suggests that the net position could continue to decline, indicating further weakening demand for the pound.

GBP/USD 1-Hour Analysis

The GBP/USD pair continues its upward and nearly uninterrupted trend on the hourly timeframe. This may not be the last trend in a series of movements within the broader upward correction on the daily timeframe. However, we still see no fundamental reason for the pound's long-term growth. We would not recommend long positions from a higher timeframe perspective and in the long run. The pound's position is not fundamentally strong, although a few recent reports have provided temporary support.

For February 26, the following key levels are highlighted: 1.2052, 1.2109, 1.2237-1.2255, 1.2331-1.2349, 1.2429-1.2445, 1.2511, 1.2605-1.2620, 1.2691-1.2701, 1.2796-1.2816. The Senkou Span B (1.2482) and Kijun-sen (1.2626) lines may also serve as potential signal points. The Stop Loss level is recommended to be set at breakeven once the price moves 20 pips in the right direction. The Ichimoku indicator lines may shift throughout the day, so this should be considered when identifying trading signals.

No significant events or reports are scheduled in the UK or the US for Wednesday, meaning strong movements are unlikely. We now expect the pound to decline for the same technical reasons that previously supported its rise. The euro and the pound may begin to fall simultaneously.

Illustration Explanations:

• Support and Resistance Levels (thick red lines): Thick red lines indicate where movement may come to an end. Please note that these lines are not sources of trading signals.
• Kijun-sen and Senkou Span B Lines: Ichimoku indicator lines transferred from the 4-hour timeframe to the hourly timeframe. These are strong lines.
• Extreme Levels (thin red lines): Thin red lines where the price has previously bounced. These serve as sources of trading signals.
• Yellow Lines: Trendlines, trend channels, or any other technical patterns.
• Indicator 1 on COT Charts: Represents the net position size for each category of traders.