In my morning forecast, I paid attention to the level of 1.2471 and planned to make decisions regarding market entry based on it. Let's look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout led to an excellent entry point for buying the pound, resulting in the pair's rise by almost 30 points. Unfortunately, we didn't quite reach the target level of 1.2510. The technical picture was revised for the second half of the day.
To open long positions on GBP/USD, it is required:
Weak seller activity around 1.2471 and the absence of UK statistics gave pound buyers a chance in the first half of the day, which they gladly took advantage of. But it's unlikely that we should expect a continuation of the upward correction, as bears may once again dominate the American session. Regardless of the wholesale inventory data, it's unlikely to have a strong impact on the market, so delaying purchases until the new support at 1.2468 is formed by the end of the first half of the day. I plan to act there only after the formation of a false breakout similar to what I discussed earlier, which will provide an entry point into long positions capable of pushing the pound back towards 1.2504. Just above it are the moving averages favoring sellers. A breakout and a top-down retest of this range against the backdrop of poor statistics would be a chance for GBP/USD to rise with a refresh to 1.2535. If there's a breakout above this range, we can talk about a surge to 1.2569, where I'll take profit. In the scenario of GBP/USD decline and the absence of buyers at 1.2468 in the second half of the day, pressure on the pound will only increase, leading to the formation of a new bearish market. In this case, I'll look for purchases around 1.2427. A false breakout would be a suitable entry point into the market. I plan to open long positions on GBP/USD immediately on the rebound from 1.2383, targeting a correction of 30-35 points within the day.
To open short positions on GBP/USD, it is required:
Bears have a good chance of continuing the pair's decline, but for this, strong US statistics and new statements from the Fed about further combating high inflation are needed. This would be enough to protect and form a false breakout around the new resistance at 1.2504, formed by the end of the first half of the day, leading to a decline in GBP/USD towards 1.2468. Bulls may not withstand another hit to this level, so a breakout and a bottom-up retest of this range will increase pressure on the pair, giving bears an advantage and another selling point with the goal of refreshing to 1.2427. Testing this level will put buyers in a very precarious position. The ultimate target will be the minimum of 1.2383, where I'll take a profit. In the scenario of a GBP/USD rise and the absence of bears at 1.2504 in the second half of the day, bulls will have the opportunity for a larger correction and refresh to the level of 1.2535. I will also enter there only on a false breakout. In the absence of activity there, I advise opening short positions on GBP/USD from 1.2569, expecting the pair to rebound down by 30-35 points within the day.
In the COT report (Commitment of Traders) as of April 30, there was a sharp reduction in long and short positions. The labor market report still needs to be factored into these figures, so objectively, we still need to complete the data. But ahead of us is the Bank of England meeting, where the regulator's position may influence the market's balance of power. For this reason, a slight outflow and a reduction in the positions of buyers and sellers do not come as a surprise. The fact that short positions outnumber long ones by one and a half times alone indicates a medium-term trend, which I will continue to adhere to. The latest COT report states that long non-commercial positions decreased by 4,791 to 43,668, while short non-commercial positions fell by 2,034 to 72,658. As a result, the spread between long and short positions decreased by 550.
Indicator signals:
Moving averages
Trading is conducted below the 30 and 50-day moving averages, indicating further pound decline.
Note: The period and prices of moving averages considered by the author are on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.
Bollinger Bands
In cases of decline, the lower boundary of the indicator at around 1.2468 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, 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 the short and long positions of non-commercial traders.
