FX.co ★ GBP/USD: trading plan for the US session on February 12th (analysis of morning deals). Pound buyers suffer defeat once again

In my morning forecast, I focused on the level of 1.2641 and planned to make entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. Growth and the formation of a false breakout at 1.2641 allowed for an entry point for selling the pound, resulting in a pair's drop by more than 25 points. However, we have yet to reach the target level of 1.2599. The technical picture remained unchanged for the second half of the day.

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

Considering the lack of data from the United Kingdom, buyers attempted again but needed help finding support from major players. I did not reconsider the technical picture because I see no reason to change what works. In the second half of the day, we can expect speeches by FOMC members Michelle Bowman and Thomas Barkin, which may lead to a new sell-off of the British pound to update the lower boundary of the sideways channel, in which the pair has been for quite a long time.

The decline and the formation of a false breakout around 1.2599 are excellent for forming an entry point for long positions, expecting a recovery of the pair to 1.2641. Only a breakthrough and consolidation above this range will restore demand for the pound and open the way to 1.2670. The target will be a maximum of 1.2703, where I plan to profit. In the scenario of a pair's decline and the absence of activity from bulls at 1.2599 in the second half of the day, which can only happen in the case of tough statements by representatives of the Fed regarding interest rates, pressure on the pound will undoubtedly persist. In this case, I will postpone purchases until testing 1.2573. Only a false breakout there will confirm the correct entry point. I plan to buy GBP/USD immediately on the rebound from the minimum of 1.2543, with the goal of a correction of 30-35 points within the day.

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

Sellers have declared themselves rather mediocre so far, but trading below 1.2641 implies a further pound decline to the lower boundary of the sideways channel. Despite this, I prefer to open new short positions only on growth around the resistance of 1.2641, similar to what I discussed earlier. The formation of a false breakout there will confirm the presence of major players, leading to the opening of short positions with the aim of further decline to 1.2599 – the support formed at the end of last week. Breaking and reverse testing from the bottom to the top of this range will deal another blow to bull positions, triggering stop orders and opening the path to 1.2573. The ultimate target will be the area of 1.2543, where profit will be taken. In the scenario of GBP/USD growth and the absence of activity at 1.2641 in the second half of the day, which is unlikely to happen, the pair will break out of the sideways channel, and buyers will attempt to continue the upward correction. In this case, I will postpone sales until a false breakout at the level of 1.2670. If there is no downward movement, I will sell GBP/USD immediately on the rebound from 1.2703, but only counting on a pair's correction down by 30-35 points within the day.

In the COT report (Commitment of Traders) for January 30th, there was an increase in both short and long positions. Despite traders now clearly seeing the future policy of the Bank of England, which intends to continue actively combating inflation despite clear signals from the economy that it's time to stop, the pound has returned to decline. The regulator has made it clear that it will not raise rates further. They also maintain a wait-and-see position in the US, so the chances of a larger pound sell-off after buyers miss the annual minimum are quite high. In the latest COT report, it is stated that non-commercial long positions increased by 4,900 to the level of 77,499, while non-commercial short positions jumped by 2,184 to the level of 43,346. As a result, the spread between long and short positions increased by 2,098.

Indicator signals:

Moving averages:

Trading is conducted around the 30 and 50-day moving averages, indicating a sideways market.

Note: The author considers the period and prices of moving averages on the hourly chart H1 and differs from the general definition of classic daily moving averages on the daily chart D1.

Bollinger Bands:

In case of a decrease, the lower boundary of the indicator, around 1.2620, will act as support.

Description of Indicators:

• Moving average (smooths market volatility and noise to identify the current trend). Period 50. Marked on the chart in yellow.

• Moving average (smooths market volatility and noise to identify the current trend). 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.

• Non-commercial long positions represent the total long open position of non-commercial traders.

• Non-commercial short positions represent the total short open position of non-commercial traders.

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