To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3441 and recommended making decisions on entering the market. Another round of inflation growth in the UK led to a breakdown and consolidation above the resistance of 1.3441, and a reverse test of this level from top to bottom formed a signal to open long positions in the expectation of implementing a bullish scenario. But by analogy with yesterday, it did not go again. After a slight increase of 15 points, the pair returned to 1.3441. No other entry points were formed. Against this background, we had to partially revise the technical picture for the afternoon.
In the afternoon, we are expecting data on the volume of construction permits issued in the United States, as well as a large number of interviews with representatives of the Federal Reserve System. I advise you to pay special attention to the statements of John Williams (a lover of a tougher Central Bank policy), as well as the speech of FOMC member Mary Daly. All this may aggravate the situation for the British pound since against the background of such good news that has been coming to the market in recent days, the lack of upward movement is a bad sign. The fact that trading is conducted in the area of moving averages further confuses the cards with determining the further direction of the pair. The main task of the bulls for the second half of the day is to protect the 1.3412 level. Only the formation of a false breakdown there will return the chance of continuing the correction of the pair to the area of 1.3466. An equally important task will be to regain control over this resistance: a breakout and a reverse test from top to bottom of 1.3466 will give an additional buy signal, which will lead to an upward movement to the area of 1.3521 with the prospect of reaching a maximum of 1.3567, where I recommend fixing the profits. In the scenario of a decline in the pair in the afternoon and the absence of bull activity at 1.3412 (this may happen if the situation around the UK's compliance with the protocol on Northern Ireland worsens), the best option for buying the pound will be a test of the next support - 1.3354. However, I advise you to open long positions there only after a false breakdown. You can watch GBP/USD purchases immediately for a rebound from the new low of 1.3308, or even lower - from the support of 1.3254, counting on a correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
Bears can only defend the resistance of 1.3466, which was formed yesterday and wait for hawkish statements from representatives of the US Federal Reserve regarding monetary policy. The formation of a false breakdown there will lead to the formation of a sell signal for the pound. But only a breakthrough and consolidation below 1.3412 with a reverse test from the bottom up will return more serious pressure on the pair, which will give a signal to sell along with the trend to reduce this week's minimum to 1.3354. A breakdown of this range will surely quickly dump GBP/USD already in the area of 1.3308 and 1.3254, where I recommend fixing the profits. If the pair grows after poor data on the real estate market in the USA and the absence of bears at 1.3466, I advise you not to rush with sales and wait for a false breakdown in the area of a new resistance of 1.3521. It is possible to open short positions immediately for a rebound from 1.3567, or even higher - from a new maximum in the area of 1.3605, counting on the pair's rebound down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for November 9 recorded an increase in short and a sharp reduction in long positions, which led to the appearance of a negative delta. Weak data on GDP growth in the UK in the 3rd quarter of this year, as well as the risk of a more serious slowdown in retail sales in the 4th quarter due to high inflation, led to a fall in the pound and continued pressure on it. An important point was the deterioration of the situation around the Server Ireland protocol, which the UK authorities plan to suspend in the near future, to which the European Union is preparing to introduce certain retaliatory measures – this does not add confidence to buyers of the British pound. At the same time, in the United States of America, we are witnessing an increase in inflation and increased talk about the need for an earlier increase in interest rates next year, which provides significant support to the US dollar. However, I recommend sticking to the strategy of buying the pair in case of very large falls, which will occur against the background of uncertainty in the policy of the Central Bank. The COT report indicates that long non-commercial positions decreased from the level of 57,255 to the level of 54,004, while short non-commercial positions strengthened from the level of 42,208 to the level of 66,097. This led to a change in the non-commercial net position in the negative direction. The delta was -12,093 against 15,047 a week earlier. The weekly closing price of GBP/USD has significantly collapsed as a result of the policy of the Bank of England - from 1.3654 to 1.3563.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates the lateral nature of the market in the short term.
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
A breakthrough of the upper limit of the indicator in the area of 1.3445 will lead to a new wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.3412 will increase the pressure on the pair.
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 certain 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.
