You require the following to open long positions on the GBP/USD:
Only one indication to enter the market was produced in the morning. Let's analyze the 5-minute chart to see what transpired there. We were able to obtain a strong buy signal thanks to the drop and the development of a false breakdown in the vicinity of 1.2311; the signal is still active as of this writing. We moved upward by a total of around 30 points, falling short of our goal of 1.2371. The technical situation and the strategy remained unchanged for the remainder of the day.
The market will undoubtedly release information on the number of initial applications for unemployment benefits and the Fed-Philadelphia manufacturing index in the second half of the day. A drop in indications will cause the pound to jump up. But it's also important to keep in mind that very positive reports on the volume of building permits issued and the number of new foundations laid are anticipated. These reports, combined with falling US inflation, will enable the US dollar to reclaim some of the ground lost during yesterday's rally against the British pound. Only a decline and the development of a false breakdown around 1.2311, analogous to the morning trade I discussed above, where the moving averages also support the bulls, will allow us to predict the continued development of a strong bullish impulse and a return above 1.2371, the level established by yesterday's results. If this range consolidates following dismal US economic data, I'll wager on a greater surge of the pound up to the monthly maximum of 1.2429. At 1.2484, where I will collect profits, an exit above this range with a top-down test will open up growth opportunities. The pressure on GBP/USD will build, which will cause a negative correction if the bulls are unable to achieve their goals and miss 1.2311 in the afternoon, which is more plausible. The best time to start long positions is on a fall and a false breakdown close to the minimum of 1.2257, so I suggest you not hurry into purchases. With the aim of a correction of 30-35 points within the day, I will purchase GBP/USD as soon as it recovers just from 1.2194.
You require the following to open short trades on the GBP/USD:
For today, sellers still have the primary responsibility of defending the resistance level of 1.2371, which we were unable to cross in the morning. However, a breakdown of 1.2311 would also be excellent if the bears are, of course, expecting something to happen soon. If the pair increases in value, only the development of a false breakdown around 1.2371 will signal the opening of short positions with the potential for a more vigorous move to 1.2311, where the moving averages are supporting buyers. Bullish chances will be eliminated by a breakthrough and a reverse test from the bottom up of this range, which was not possible during the European session, generating a sell signal with a rise to 1.2257. The area of 1.2194 will be my farthest aim, where I will fix the profit. In the lack of bears around 1.2371 and with the possibility of GBP/USD expansion, a new positive trend will continue to develop. In this instance, the only entry opportunity into short positions to continue down is a false breakout in the vicinity of the monthly maximum of 1.2429. If there is no activity there, I will sell GBP/USD right away at its highest price of 1.2484, but only if I believe the pair will decline another 30-35 points during the day.
There was a substantial decline in long positions and a sharp increase in short positions in the COT report (Commitment of Traders) for January 10. However, you should be aware that this analysis does not account for the US inflation data that was released last Thursday. This data had a big impact on the alignment of forces, and the situation, in reality, may have since changed dramatically. The demand for risky assets, including the British pound, which is battling to maintain its growth, returned in December of last year as a result of the slowing rate of price growth in the United States. This week's positive labor market statistics will help the pound maintain its position at recent highs and establish a new upward trend. I also suggest that you listen carefully to what the Federal Reserve System and Bank of England officials have to say. They will have a dramatic impact on central bank policy. According to the most recent COT report, short non-commercial holdings climbed by 1,537 to 65,463, while long non-commercial positions declined by 7,618 to 36,007, which caused the non-commercial net position's negative value to increase to -29,456 from -20,301 the previous week. It is important to note that the negative delta has risen for three consecutive weeks. This might be a sign that the major players no longer think the pound will increase and are working to unload as much of their positions as they can. When buying the pair at its current highs, exercise caution. Compared to 1.2004, the weekly closing price increased to 1.2182.
Signals from indicators
Moving Averages
Trading occurs in the vicinity of the 30 and 50-day moving averages, which suggests market turbulence.
Note that the author's consideration of the period and costs of moving averages on the hourly chart H1 differs from the standard definition of the traditional daily moving averages on the daily chart D1.
Bands by Bollinger
The indicator's lower limit, which is located at 1.2311, will serve as support in the event of a downturn.
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.
