In my morning forecast, I paid attention to the level of 1.3142 and recommended in detail what to do if this price is reached. Let's look at the 5-minute chart and figure out how to act. An unsuccessful breakthrough of this range after the release of a fairly good report on UK GDP led to the formation of a false breakdown and a signal to sell the pound. At the moment, the pair failed by 30 points, and the pressure continues to persist. And what were the entry points for the euro this morning?
To open long positions on GBP/USD, you need:
What happened last year and what the UK economy was like is no longer important, given what changes are taking place in the world now and what all this can lead to. The Bank of England and the Ministry of Finance are sounding the alarm due to a sharp drop in household living standards, but they can't do anything about it. It is unclear who to save - the population, which can tighten their belts, and whose problems can always be blamed on other countries, if you know what I mean, or the economy, which is sagging under serious inflationary pressure, just starting a new wave of growth due to geopolitical tensions in the world. As for the short-term market reaction, in the afternoon there will be reports on changes in the level of spending and income of the US population, from which economists do not expect anything good. Weekly data on the number of initial applications for unemployment benefits in the United States is unlikely to impress traders and will help the British pound in some way - I bet on its further fall in the afternoon, but I will start from the plan. If the reports turn out to be worse than economists' forecasts, we can expect a return of GBP/USD to the resistance area of 1.3142. A breakdown and a test of this range from top to bottom form an entry point into long positions, which will strengthen the position of buyers and open up the prospect of growth in the area of yesterday's high of 1.3180, where I recommend fixing profits. A more distant target will be the 1.3219 area. However, it will be quite difficult to get to this level. In the scenario of a fall in GBP/USD during the American session, the bulls will manifest themselves in the area of 1.3102. But to buy from this level, you need a false breakdown and weak statistics for the United States. If everything turns out differently, and the bulls do not show activity at 1.3102, it is best to postpone purchases to a larger level of 1.3062. I advise you to enter the market there only if there is a false breakdown. You can buy GBP/USD immediately on a rebound from 1.3033, or even lower - in the area of 1.3003 and only with the aim of correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
Sellers have coped with their task of protecting 1.3142 perfectly, and until the moment when trading is conducted below this range, we can expect the pressure on the pair to remain. The bears are still feeling quite calm, even though the bulls are taking action to build a new upward correction of the pair. At the moment, trading is conducted in the area of moving averages, which indicates the lateral nature of the market and the active confrontation between buyers and sellers. The primary task of the bears is to protect the 1.3142 range. The formation of a false breakdown at this level, by analogy with what I discussed above, will give an entry point into short positions to return the bear market and the subsequent decline of the pair to the area of 1.3102. We will have to fight for this level since re-going beyond this range will lead to the demolition of several buyers' stop orders, which will bring GBP/USD to the lows: 1.3062 and 1.3033. In the case of hawkish statements by FOMC member John Williams on the topic of interest rates, the 1.3003 area will be a more distant target, where I recommend fixing profits. If the pair grows during the American session and sellers are weak at 1.3142, it is best to postpone sales to 1.3180 - yesterday's maximum. I also advise you to open short positions there only in case of a false breakdown. You can sell GBP/USD immediately for a rebound from the maximum of 1.3219, or even higher – from 1.3253, counting on the pair's rebound down by 30-35 points within a day.
The COT reports (Commitment of Traders) for March 22 recorded a sharp increase in short positions and only a slight strengthening of long ones. Several statements made by representatives of the Federal Reserve System last week returned pressure on the British pound, which is already experiencing quite serious problems with growth due to problems in the economy, which have already led to a decline in household living standards. Experts note that the situation will only worsen, as inflation risks, which mainly negatively affect the economy, are now quite difficult to assess. High energy prices and the geopolitical situation in Ukraine, together with several sanctions from the UK and other countries - all will slow down the economy. The softer position of the governor of the Bank of England this week has already led to another sell-off of the British pound, which is likely to continue due to the lack of good news. The only thing the bulls can count on now is the positive results of the negotiations between the representatives of Russia and Ukraine and progress towards a settlement of the conflict. The COT report for March 22 indicated that long non-commercial positions rose from the level of 32,442 to the level of 32,753, while short non-commercial positions jumped from the level of 61,503 to the level of 69,997. This led to an increase in the negative value of the non-commercial net position from -29,061 to -37,244. The weekly closing price increased from 1.3010 to 1.3169.
Signals of indicators:
Moving Averages
Trading is conducted around 30 and 50 daily moving averages, which indicates market equilibrium.
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
In case of a decline, the lower limit of the indicator around 1.3105 will act as support. In case of growth, the 1.3145 area 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 use the futures market for speculative purposes and to 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.
