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FX.co ★ GBP/USD: plan for the US session on July 27 (analysis of morning deals). The pound declined after weak fundamental statistics

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Forex Analysis:::2021-07-27T11:16:13

GBP/USD: plan for the US session on July 27 (analysis of morning deals). The pound declined after weak fundamental statistics

To open long positions on GBP/USD, you need:

In my morning forecast, I paid attention to the levels of 1.3811 and 1.3774 and advised them to enter the market. Let's look at the 5-minute chart and analyze the entry points. Even in the first half of the day, the bears are trying to break through the support of 1.3811, but there was no reverse test of this level from the bottom up. As a result, the pair quickly falls on the background of retail sales data in the UK, but the bears rest on the support of 1.3774. After several unsuccessful attempts to break below this range, a signal is formed to open long positions. So far, the maximum rebound upward was 20 points.

GBP/USD: plan for the US session on July 27 (analysis of morning deals). The pound declined after weak fundamental statistics

In the second half of the day, buyers will need to think carefully about protecting the support of 1.3774. As long as trading is conducted above this range, you can count on a larger growth of the pair within the day. Only the next formation of a false breakout in this range will lead to an additional entry point into long positions in continuation of the bullish trend observed since the middle of last week. In this case, the target of buyers will be the resistance of 1.3814, which they missed today. Breakouts and a reverse test of this level from top to bottom, together with weak data on the US economy, form an additional signal to open long positions in the expectation of updating the maximum of 1.3857, where I recommend fixing the profits. The next target will be the area of 1.3896. If the bears are more persistent and buyers do not show any activity in the support area of 1.3774 in the second half of the day, the optimal scenario will be purchases when a false breakdown is formed in the support area of 1.3742. You can buy the pound immediately for a rebound based on an upward correction of 25-30 points within the day only from the minimum of 1.3708.

To open short positions on GBP/USD, you need:

The initial task of the bears is now to protect the resistance of 1.3814, which they successfully got today in the first half of the day. Good data on the US consumer confidence indicator should certainly help the bears cope with this task. But only the formation of a false breakdown there will lead to the formation of a sell signal in the expectation of a breakout of the support of 1.3774, near which trading stopped today. A breakdown and a reverse test of this level from the bottom up will lead to forming a new entry point into short positions. The demolition of buyers' stop orders below will collapse GBP/USD to a minimum of 1.3742, where I recommend fixing the profits. A more distant target will be the support of 1.3708. In the absence of active actions of sellers in the area of 1.3814, I advise you to postpone sales until the test of a larger maximum of 1.3857. It is also possible to sell GBP/USD immediately on a rebound from 1.3896 based on a downward correction of 25-30 points within the day.

GBP/USD: plan for the US session on July 27 (analysis of morning deals). The pound declined after weak fundamental statistics

The COT reports (Commitment of Traders) for July 20 recorded a slight reduction in long positions and good short-term growth. Despite the large drop in the pound, as we can see on the chart, the downward movement was quickly played out at the end of last week. However, this report does not take this into account, so there is a feeling that the pound was completely under the control of the bears. The panic after the lifting of all quarantine restrictions in the UK and the full opening of the economy occurred when a sharp increase in infections with a new strain of coronavirus began in England, and politicians arranged a dispute with each other about how to respond to it. But then, by the middle of the week, the situation stabilized, and the pound managed to recover all its losses against the US dollar. Traders still expect that the Bank of England representatives will soon start talking more about plans to reduce the bond purchase program. I have repeatedly drawn attention to the fact that traders pay special attention to every major drop in the GBP/USD and show interest in it. Because sooner or later, the central bank will start talking about curtailing measures to support the economy, which will positively impact the British pound and lead to its growth. But while there has not been a serious exit beyond the target level of inflation in the UK, it is unlikely that the Bank of England will rush to change its policy. Despite this, the optimal scenario is to buy the pound with each good decline in pair with the US dollar. The COT report indicates that long non-commercial positions decreased from the level of 44,686 to the level of 44,223, while short non-commercial positions increased from the level of 36,717 to the level of 47,720. As a result, the non-commercial net position turned negative and amounted to -3,496, against 7,969. Last week's closing price fell from 1.3886 to 1.3668

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily averages, which indicates some market uncertainty with the pair's further direction.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

If the pound rises, the upper limit of the indicator in the area of 1.3845 will act as a resistance.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet specific requirements.
  • Long non-commercial positions represent the total long open position of non-commercial traders.
  • Short non-commercial positions represent the total short open position of non-commercial traders.
  • Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
Analyst InstaForex
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