FX.co ★ GBP/USD: trading plan for the US session on December 5th (analysis of morning deals). The pound saved the level of 1.2605 again

In my morning forecast, I emphasized the level of 1.2605 and recommended making decisions based on it when entering the market. Let's look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.2605 led to an excellent buying signal, resulting in the pair rising by more than 40 points. The technical picture remained unchanged for the second half of the day.

To open long positions on GBP/USD, the following is required:

Good data on the PMI index for the UK services sector allowed buyers to defend 1.2605 for the fourth consecutive time, maintaining the chances of the pound's growth in the second half of the day. However, ahead of us is similar data for the US. If the indicator demonstrates good activity growth, sellers may again "pile up" on the pound, pushing it towards support at 1.2605. Only the formation of a false breakout there, similar to what I analyzed above, will provide an entry point for long positions to restore GBP/USD and test resistance at 1.2644, where the moving averages, playing on the sellers' side, are located. Breaking and consolidating above 1.2644 against weak US statistics is a chance to buy to update resistance at 1.2681. The target will be the monthly maximum of 1.2722, where I will take profits. In the scenario of the pair's decline and the absence of bullish activity at 1.2605, and this level will be broken sooner or later, things for buyers will deteriorate significantly. In this case, only a false breakout around the next support at 1.2563 will signal the opening of long positions. I plan to buy GBP/USD immediately on the rebound, only from 1.2526, with a correction target by 30-35 points within the day.

To open short positions on GBP/USD, the following is required:

Sellers still have every chance to build a more powerful downward correction. However, I plan to sell against the trend only today after defending resistance at 1.2644. The formation of a false breakout there will allow a downward movement towards support at 1.2605, which has yet to be overcome since November 28. Therefore, only a breakthrough and a reverse test from the bottom to the top of this range, along with a strong report on the US composite PMI, will deal a more serious blow to the positions of the bulls, leading to stop-loss sweeps and opening the way to 1.2563. The more distant target will be the area of 1.2526, where I will take profits. In the case of GBP/USD growth and the absence of activity at 1.2644 during the American session, trading will continue within the framework of a sideways channel. In this case, I will postpone sales until a false breakout at 1.2682. Without downward movement, I will sell GBP/USD immediately on the rebound from 1.2722, but only counting on a pair correction down by 30-35 points within the day.

In the COT report (Commitment of Traders) for November 28, there was a sharp increase in long positions and a slight reduction in short positions. The demand for the pound continues, buoyed by statements from Bank of England Governor Andrew Bailey. He indicated that if the regulator does not proceed with further interest rate hikes, it will, at the very least, sustain them at their present highs for an extended period. This stance is assisting in drawing in new buyers to the market. Furthermore, when you factor in the dovish rhetoric from representatives of the Federal Reserve System, including its chairman Jerome Powell, it becomes evident why the pound might experience continued upward momentum soon. Important labor market statistics for the US will be released soon, which will clarify everything. The latest COT report states that non-commercial long positions increased by 17,996 to 61,296, while non-commercial short positions fell by 207 to 69,191. As a result, the spread between long and short positions increased by 2,442. The weekly closing price rose and reached 1.2701 against 1.2543.

Indicator signals:

Moving averages

Trading is carried out below the 30 and 50-day moving averages, indicating problems with the British pound.

Note: The author sets the period and prices of the moving averages on the H1 chart, which differs from the general definition of classical daily moving averages on the D1 chart.

Bollinger Bands

In case of a decline, the lower boundary of the indicator, around 1.2605, will act as support.

Description of indicators:

Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.

Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.

MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.

Bollinger Bands (Bollinger Bands). Period 20.

Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and 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 positions of non-commercial traders.

The total non-commercial net position is the difference between non-commercial traders' short and long positions.