Forex Analysis & Reviews: 27.12.2024 - GBP/USD: December 27th. The...

27.12.2024 11:17 AM

GBP/USD: December 27th. The Pound Lacks Trader Interest

On the hourly chart, the GBP/USD pair continued its sluggish decline toward the 1.2488 level on Thursday. However, this level was not reached, and the movement can barely be called a "decline." Today, the pound shows some growth, but the increase is so weak that reaching the 1.2569 level (which is very close) seems unlikely for the bulls. In essence, there is no significant movement in the market, nor are there trading signals.

The wave situation is straightforward. The last completed upward wave failed to surpass the peak of the previous wave, while the most recent downward wave easily broke the previous low. This confirms that the "bullish" trend has ended, and a new "bearish" trend is forming. For the bearish trend to conclude, the pound must grow at least toward the 1.2709–1.2734 zone.

On Thursday, the economic calendar included U.S. initial jobless claims data, but this did little to distract traders from holiday preparations. Neither the bears nor the bulls have strong reasons to open new positions, leading to a stagnant market. This sideways pattern may persist until the end of the year. In the near term, GBP/USD may decline to 1.2488, as the distance to this level is small. However, a close below this level will require significant effort from the bears, likely necessitating new economic data—which is currently unavailable. The "bearish" trend remains intact but might be paused until next year.

The pair recently reversed in favor of the U.S. dollar and solidified below the 76.4% Fibonacci retracement level at 1.2565. This opens the door for further declines toward 1.2432. The downward trend channel highlights the bears' dominance, which they are unlikely to relinquish soon. Only a close above the trend channel would suggest the potential for a strong rally in the pound.

Commitments of Traders (COT) Report

Trader sentiment in the "Non-commercial" category has shown little change over the past week. Long positions increased by 4,707, while short positions decreased by 3,092. Bulls still hold the advantage, but their dominance has visibly weakened in recent months. The gap between long and short positions is now just 27,000: 102,000 vs. 75,000.

The data suggests that the pound still faces downward pressure. COT reports indicate that bearish positions are strengthening almost weekly. Over the past three months, long positions have fallen from 160,000 to 102,000, while short positions have grown from 52,000 to 75,000. In my view, professional traders will likely continue reducing longs or increasing shorts, as all potential factors supporting the pound have already been priced in. Technical analysis also favors further declines.

News Calendar for the U.S. and the U.K.

On Friday, the economic calendar features no notable releases. Thus, market sentiment is unlikely to be influenced by the news today.

Forecast for GBP/USD and Trader Recommendations

Short positions: These were viable following a rebound from the 1.2611–1.2620 zone on the hourly chart, with targets at 1.2488 and 1.2363–1.2370. These trades can still be held open.
Long positions: Considerable at a rebound from 1.2488 on the hourly chart, with nearby targets already reached. New buys will be possible following another rebound from 1.2488.

Fibonacci Levels

Hourly chart: 1.3000–1.3432.
4-hour chart: 1.2299–1.3432.

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# GBPUSD Technical analysis