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flag - GBP/USD. September 16. COT report. The pound needs new reasons to fall.

Forex Analysis:::2020-09-16

GBP/USD. September 16. COT report. The pound needs new reasons to fall.



According to the hourly chart, the quotes of the GBP/USD pair performed a consolidation above the downward trend line. For three days, the British pound could not resume falling, so now there are certain chances for the growth of the British currency. After the collapse of the British dollar by 700 points, traders seem to have calmed down. The failure of the next two stages of negotiations between London and Brussels has been played back with interest. The controversial bill "on the internal market of Great Britain" was previously approved by the Parliament. This news is also already won back by traders with a vengeance. Thus, a rebound followed from the corrective level of 161.8% (1.2789), which allows us to count on growth to the Fibo level of 127.2% (1.2937). Closing the pair's rate above this level will further increase the chances of further growth of quotes. From my point of view, the growth of the British dollar will be logical, since there is no new negative news from the UK and it seems that it will not arrive until at least tomorrow when the results of the Bank of England meeting will be summed up. As with the Fed, the Bank of England's monetary policy is likely to remain unchanged, so the regulator's final communique and press conference (if any) will be of the greatest interest.



On the 4-hour chart, the GBP/USD pair performed a reversal in favor of the British currency and fixed above the corrective level of 50.0% (1.2867). Thus, the growth process can be continued towards the next corrective level of 38.2% (1.3010). The bearish divergence of the CCI indicator continues to remain in force, so the reverse consolidation under the Fibo level of 50.0% will work in favor of the US currency and the resumption of the fall in the direction of the corrective level of 61.8% (1.2720).



On the daily chart, the pair's quotes performed a rebound from the Fibo level of 76.4% (1.2776), which now allows traders to expect some growth in the direction of the corrective level of 100.0% (1.3199). Fixing quotes below the Fibo level of 76.4% will increase the chances of a further fall in the direction of the corrective level 61.8% (1.2516).



On the weekly chart, the pound/dollar pair closed under the lower downward trend line, so a false breakout of this line followed earlier. The pair returns to a downward trend.

Overview of fundamentals:

On Tuesday, the UK released reports on unemployment and wages, which were generally expected in their values.

News calendar for the US and UK:

UK - consumer price index (06:00 GMT).

US - change in retail trade volume (12:30 GMT).

US - FOMC decision on the main interest rate (18:00 GMT).

US - FOMC cover letter (18:00 GMT).

US - FOMC economic forecast (18:00 GMT).

US - FOMC press conference (18:30 GMT).

On September 16, the UK news calendar contains an inflation indicator, and in America, the results of the Federal Reserve meeting will be summed up. Thus, the activity of traders may increase today.

COT (Commitments of Traders) report:


The paradoxical COT report on the pound. You can't say otherwise. According to the latest COT report, major players in the "Non-commercial" group were cutting long contracts, however, they were also cutting short contracts. And it was the latter that they closed much more. 8 thousand sales and 3.5 thousand purchases. Thus, it turns out that the British even had to show growth. However, on September 2, it began a severe fall and has now fallen by 700 points. The same applies to the "Commercial" group, which increased long contracts in the amount of 14 thousand and increased short contracts in the amount of 9 thousand. Again, it turns out that the British pound should have shown growth in the reporting week. In general, the reported data turned out to be very strange and did not correspond to what was happening in the foreign exchange market.

Forecast for GBP/USD and recommendations for traders:

I recommend selling the British currency with a target of 1.2720, if the close is made under the level of 50.0% (1.2867) on the 4-hour chart. I recommend opening purchases of the British dollar if it is fixed above the level of 127.2% (1.2937) on the hourly chart, with a target of 1.3053.


"Non-commercial" - major market players: banks, hedge funds, investment funds, private, large investors.

"Commercial" - commercial enterprises, firms, banks, corporations, companies that buy currency, not for speculative profit, but for current activities or export-import operations.

"Non-reportable positions" - small traders who do not have a significant impact on the price.

Samir Klishi
Analyst InstaForex
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