In my morning forecast, I focused on the 1.1950 level and suggested making decisions about entering the market from there. Let's take a look at the 5-minute chart and see what happened. We were able to find an entry point to purchase the pound thanks to a breakout and a reverse test from the top down of this range, which led to a gain of more than 30 points. We fell short of the nearest resistance at 1.1985, though. The technical picture was partially altered in the afternoon.
You require the following to open long positions on the GBP/USD:
The US statistics and the market's response to the data will both be important factors. Assuming that the pound has sufficiently adjusted upward, it is now appropriate to determine whether buyers are present in the new support area of 1.1952. I anticipate movement there following the release of data on changes in the volume of pending housing sales and orders for long-term products, as well as following the statement of FOMC member Philip N. Jefferson, who likewise holds a hawkish view on interest rates. In the late afternoon, if a false breakout forms at 1.1952, you can use that as an entry point to buy with the hope of a breakthrough to 1.1992. I will only wager on the continuation of the movement of GBP/USD up to the maximum of 1.2027 after fixing and testing this range from top to bottom following the release of the US data. Although it is unlikely today, an exit above this range would open up growth prospects at 1.2066, where I have fixed profits. The continuation of the downward trend will be called into doubt if this area is tested. The bears will return control of the market if the bulls are unable to complete their tasks and miss 1.1952, which is also probable after the speech by Federal Reserve System members. In this situation, I suggest against making hasty purchases and only starting long positions close to the 1.1916 support level and only in the event of a false collapse. I'll buy GBP/USD right away only if it rises over the monthly low of 1.1875 with the intention of a correction of 30-35 points during the day.
For opening short positions on the GBP/USD, you will need:
Sellers failed to complete the tasks assigned for the day's first half and failed to protect the closest support. And even while this has not yet had a significant impact on their self-esteem, it is crucial to stop the pound from rising above 1.1992 right now. I anticipate the formation of a false breakout in the area of 1.1992 with a new surge of the pair up to this range following dismal US statistics. This false breakout will serve as a signal to enter the market with the possibility of a collapse in the area of new support 1.1952. A bottom-up test of this level will cancel out buyers' plans for further correction, returning the market to a bearish nature with a sell signal and a fall to 1.1916. The area of 1.1875 will be my furthest target, where I'll make a profit. By 1.1992 in the afternoon, when there were no bears and the possibility of GBP/USD rise, bulls continued to actively enter the market. In this scenario, the bears will pull back once again, and an entry point into short positions will only come from a false collapse in the vicinity of the following resistance level of 1.2027. In the absence of action, I will sell GBP/USD immediately from the high of 1.2066, but only if the pair falls by 30-35 points within the day.
There were more long positions and fewer short ones in the COT report (Commitment of Traders) for January 31. Traders chose to leave the market before the meeting because they were betting on a future hike in interest rates from the Bank of England. However, it should be noted that these data are of no importance right now because statistics are only just starting to catch up following the cyberattack on the CFTC and the information from a month ago is not very pertinent right now. I'll wait for new reports to be released before relying on more recent statistics. Except for a few reports, there are no significant fundamental indicators for the US economy this week, so the pressure on risky assets may lessen slightly. In principle, this may increase the pound's value relative to the US dollar. According to the most recent COT data, short non-commercial positions fell by 4,139 to 54,551, while long non-commercial positions rose by 1,478 to 36,234. As a result, the non-commercial net position's negative value declined to -18,317 from -23,934 a week earlier. In comparison to 1.2350, the weekly ending price dropped to 1.2333.
Signals from indicators
Moving Averages
Trade is taking place around the 30 and 50-day moving averages, which further suggests that the pair's direction is uncertain.
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 upper limit, which is located at 1.1975, will serve as resistance in the event of growth.
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.
