I focused on the level of 1.2066 when I made my morning forecast and suggested trading actions based on it. Let's take a look at the 5-minute chart and see what happened. We were able to determine an entry point for the purchase of the pound, which has so far resulted in an upward movement of 15 points, thanks to a breakthrough and a reverse test from the top to the bottom of this range. At the time of writing, the signal is still in effect. The technical picture was partially changed in the afternoon.
You require the following to open long positions on the GBP/USD:
The resistance level of 1.2100 is the buyers' first target, and as I predict, the battle will take place in the afternoon. The market's reaction to the consumer confidence index data and US statistical data will both be important factors. Contrary to experts' predictions, its collapse could cause the pound to rise again suddenly. The pressure on the pair will increase again if the data come in higher than expected. Buyers will then enter the market, but I anticipate that their activity will only be seen at the new support level of 1.2053. The decline and formation of a false breakout there in the afternoon will provide you with an excellent entry opportunity to purchase with the possibility of a breakout of 1.2100. I will only wager on the continuation of the movement of the GBP/USD up to the maximum of 1.2142 after fixing and testing this range from top to bottom following weak US data. Although it is unlikely that an exit would occur above this area today, it will open up growth opportunities around 1.2177, where I have set profits. The emergence of a new bullish trend will be signaled by a test of this area. The market will return to equilibrium if the bulls are unable to complete the tasks and miss 1.2053, which is also plausible after the speech of Federal Reserve System members. In this situation, I advise against making hasty purchases and to only start long positions at the 1.2017 support and only in the event of a false drop. I'll buy GBP/USD right away only if it rises over the monthly low of 1.1978 with the intention of a correction of 30-35 points during the day.
For opening short positions on the GBP/USD, you will need:
The sellers are still taking a wait-and-see approach because they were unable to complete the tasks assigned for the morning. Be cautious because a fairly upward correction of the pound can seriously harm a bearish trend's chances. Short positions will be considered only after the formation of a false breakout in the area of 1.2100, which will lead to a signal to enter the market with the prospect of a decrease in the area of new support of 1.2053 formed following the results of the European session. A bottom-up test of this level will cancel buyers' expectations for further correction and return the market to a bearish character with a sell signal and a decline by 1.2017, where the moving averages are on the bulls' side. The farthest target will be the 1.1978 area, where I will take profit. Given the possibility of more GBP/USD growth and the absence of bearish at 1.2100, the bulls will continue to actively enter the market. In this case, the bears will retreat once more, and only a false breakout near the next resistance level of 1.2142 will provide an entry point into short positions. In the absence of activity, I will sell GBP/USD immediately from the high of 1.2177, 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. They will wait for new reports to be released before relying on more recent statistics. Except for a few reports, there are no significant fundamental indicators on 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 above the 30 and 50-day moving averages, which suggests that the pair will continue to increase.
Notably, the author considers the time and prices of moving averages on the hourly chart H1 and departs 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 1.2090, 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.
