Numerous reefs of the Foggy Albion require caution

By having a look at the GBPUSD chart and listening to different traders' opinions, we can realize that the majority believe that the market "owns" smth to them without any reasonable arguments. Such a situation emerges a significant stream of background information where no one can understand anything. So, let's check and try to understand how it works.

Basic arguments

The "hanging" Brexit still remains the primary argument which creates confusion and pushes GBP down. At the current price level, it may seem that GBP is significantly underestimated. Now it is near 1,22 GBP per USD, while the fair price is 1,26 GBP per USD. The majority of individual traders keep dreaming about a correction, while their losses are getting higher and higher. Anyways, what we can say for sure that it is still too early for a correction - still too foggy in the Albion.

Technical arguments

A long and continuing trend may be alarming as it storms historical minimums. However it is time to think about it: if the market storms the minimums so easily, then it means that indeed this trend is very strong and it is reasonable to trade on it.

Analysis of big traders

Picture 1. The price chart of GBPUSD and the indicator of big traders for the period of 30.06.2019 - 30.07.2019.

As we can see in picture 1, the number of hedgers positions continue to grow running into the ceiling of the index, which creates certainty for the trend.

Forecast

Based on the arguments provided above, we forecast a DOWNWARD movement for the near future.

For better control over your positions, we recommend to use the following indicators:

• Bollinger Lines
• Moving Average

To keep the level of risk moderate, we recommend keeping the ratio of 4 trades down and 3 up.