In my morning forecast, I emphasized the level of 1.2753 and recommended considering it for trading decisions. Let's examine the 5-minute chart and analyze the developments. Due to low volatility and Bank of England Governor Andrew Bailey's speech, the pound could not surpass 1.2753, leading to pressure on the currency pair. From a technical standpoint, the second half of the day has remained the same.
To initiate long positions on GBP/USD, the following conditions should be met:
During the second half of the day, we anticipate Federal Reserve Chairman Jerome Powell's speech, which is unlikely to address monetary policy matters since everything has already been discussed during and after the June committee meeting. Data on the goods trade balance and wholesale trade inventories are unlikely to impact market direction significantly. As a result, the focus will shift to technical levels.
As long as trading remains above 1.2692, there will be demand for the pound. A decline and another false breakout formation will offer an additional entry point for long positions, potentially pushing GBP/USD toward the middle of the sideways channel at 1.2753. Just below that level, there are moving averages favoring sellers. Suppose there is a breakthrough and a retest from the top to the bottom of this range. In that case, it will eliminate all bearish possibilities and provide an additional signal to open long positions, targeting a maximum of 1.2813. The ultimate target will be around 1.2876, where I plan to take profits.
In the scenario of a decline towards 1.2692 and a lack of buyer activity following the release of US statistics, pressure on the pound will increase as there will be no further reasons to buy. In that case, only defending the next level at 1.2625 and a false breakout will signal an opportunity to open long positions. I plan to buy GBP/USD on a rebound only from 1.2574, with a 30-35 point correction target within the day.
To initiate short positions on GBP/USD, the following conditions should be met:
Sellers have displayed activity and are now focused on further downward movement of the currency pair. In the event of weak US data, only a false breakout at 1.2753 will provide a selling signal, reintroducing pressure on the pair for another retest of 1.2692. If there is a breakthrough and a retest from the bottom to the top of this range, it will deliver a more significant blow to buyer positions, pushing GBP/USD towards 1.2625. The ultimate target remains at a minimum of 1.2574, where I plan to take profits.
If GBP/USD shows growth and there is limited activity at 1.2753 in the second half of the day, along with another attempt at a downward correction, it will indicate a change, with bulls regaining control of the market. I will delay selling until a resistance test at 1.2813 in that scenario. A false breakout at that level will provide an entry point for short positions. If there is no downward movement at that level, I will open short positions on GBP/USD on a rebound from 1.2876, but with the expectation of a 30-35 point correction within the day.
The COT (Commitment of Traders) report for June 13 showed a significant increase in both long and short positions. The pound has recently risen considerably, attracting the attention of sellers. However, the Bank of England's aggressive policy and the latest inflation data in the UK are attracting new buyers who anticipate further interest rate hikes. The British pound's attractiveness is strengthened by the fact that the Federal Reserve has paused its tightening cycle, while the Bank of England has no plans to do the same. According to the latest COT report, short non-commercial positions increased by 17,069 to 69,648, while long non-commercial positions jumped by 11,320 to 76,383. This led to a slight decrease in the non-commercial net position to 6,736 compared to 12,454 the previous week. The weekly price increased and reached 1.2605 compared to 1.2434.
Indicator signals:
Moving Averages
Trading is currently taking place slightly below the 30-day and 50-day moving averages, indicating a further decline in the pair.
Note: The author considers the period and prices of the moving averages on the H1 hourly chart, which differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In case of a decrease, the lower boundary of the indicator, around 1.2692, will act as support.
Description of Indicators
• Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving Average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence) - Fast EMA period 12, Slow EMA period 26, SMA period 9.
• Bollinger Bands - Period 20.
• Non-commercial traders - speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific 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.
• The net non-commercial position is the difference between non-commercial traders' short and long positions.
