Analysis of GBP/USD 5M:
The GBP/USD currency pair continued its weak upward movement on Monday, breaking through the important Senkou Span B line. Thus, the British pound is one step closer to an upward trend. It cannot be said that any specific information supported the British pound on Monday; rather, it was about continuing the recovery after the plunge two weeks ago. The market certainly reacted to Trump's optimistic statements last week, but at the same time, the euro showed practically no growth. Thus, we tend to view the pound as demonstrating a corrective recovery after an unfair decline.
From a technical perspective, on the hourly timeframe, a new upward trend has begun to form. The price has surpassed the Senkou Span B line, and a new, convincing upward trend line has formed. Without geopolitical support, it will be challenging for the British currency to sustain growth over the long term, and the market continues to ignore macroeconomic and fundamental factors. Therefore, the market will once again wait for a resolution: either a preliminary agreement will be signed, or the negotiations will fail. In the first case, further growth of the pair is expected; in the second, a decline.
On the 5-minute timeframe, one buy signal was generated on Monday. The pair broke through the 1.3465-1.3480 area, allowing traders to open long positions. By the end of the day, the British pound had risen by 15 pips, but upward movement may continue. Therefore, a Stop Loss can be set to breakeven while waiting for greater profits. Volatility has been relatively low in recent days.
Analysis of GBP/USD 4H:
On the 4-hour timeframe within the ICT trading system, the pound likely began to form an upward trend, but the structure was not broken as the CHOCH line is still at the very beginning of the previous movement. Last Friday, the price reacted to a "bullish" FVG in the 1.3407-1.3430 area, and today formed another bullish FVG in the 1.3453-1.3472 area, triggering a reaction and pushing it higher again. Thus, traders had two opportunities to open long positions. As we can see, both trades are currently profitable.
Analysis of GBP/USD 1H:
On the hourly timeframe, the GBP/USD pair has begun a new upward trend. The macroeconomic and fundamental backdrop continues to have little influence on the pair's movements, while geopolitics regularly provokes price fluctuations in different directions. We do not believe that without a real escalation of conflict in the Middle East, the dollar can demonstrate strong growth. The U.S. currency can only anticipate a drop in negotiations between Iran and the U.S. and a slight increase regarding this matter.
For May 26, we highlight the following important trading levels: 1.3096-1.3115, 1.3179-1.3187, 1.3369-1.3377, 1.3465-1.3480, 1.3588, 1.3671-1.3681, 1.3751-1.3763. The lines of Senkou Span B (1.3477) and Kijun-sen (1.3439) may also serve as signal sources. It is recommended to set the Stop Loss to breakeven once the price has moved in the correct direction by 20 pips. The lines of the Ichimoku indicator may shift throughout the day, which should be taken into account when determining trading signals.
On Tuesday, there are again no significant events scheduled in the UK or the US, so all attention remains on geopolitics. Trump's statements about coordinating a memorandum with Iran have not been confirmed by Tehran, which is why the market is reluctant to sell dollars. Additionally, no information has come in on the timelines for signing the agreement.
Trading Recommendations:
Today, traders may open short positions targeting 1.3369-1.3377 if the pair consolidates below the new trend line. Long positions remain relevant after surpassing the 1.3465-1.3480 area, with a target at 1.3588. Long positions on the 4-hour timeframe remain relevant after buy signals were formed in the 1.3407-1.3430 area last Friday and a buy signal in the 1.3453-1.3472 area on Monday.
Explanations for Illustrations:
Price support and resistance levels – thick red lines, around which movement may conclude. They are not sources of trading signals.
Kijun-sen and Senkou Span B lines – lines of the Ichimoku indicator moved to the hourly timeframe from the 4-hour one. They are strong lines.
Extreme levels – thin red lines from which the price previously bounced. They are sources of trading signals.
Yellow lines – trend lines, trend channels, and any other technical patterns.
CHOCH – break in the trend structure.
Liquidity – liquidity, stop loss, and pending orders that market makers use to establish their positions.
FVG – price inefficiency area. Prices pass through such areas very quickly, indicating a complete absence of one side in the market. Subsequently, the price tends to return and react from these areas, continuing the main trend.
IFVG – inverted price inefficiency area. After returning to such an area, the price does not react to it; instead, it impulsively breaks through and then tests from the other side.
OB – order block. A candle in which the market maker opened a position to take liquidity and establish its own position in the opposite direction.
