Yesterday, several entry points into the market were formed. Let's take a look at the 5-minute chart and analyze what happened. In my morning forecast, I highlighted the level of 1.3073 and planned to make entry decisions based on it. The rise and formation of a false breakout at 1.3073 led to a sell entry for the pound, resulting in only a 15-pip move down. In the second half of the day, active bearish actions around 1.3100 allowed for entering short positions on the pound, moving down to the area of 1.3073.
For opening long positions in GBP/USD, the following is required:
The pound rose on news that the US unemployment rate rose to 4.4% in September; however, the bullish momentum was offset by a positive report on the rise in non-farm employment. Today, many important reports are expected in the first half of the day. It will start with the volume of retail sales in the UK and conclude with reports on the PMI indices for the manufacturing and services sectors, as well as the UK composite PMI index. The speech by Bank of England Monetary Policy Committee member Huw Pill will take a back seat. If the pair declines after weak data—especially in the services sector—only the formation of a false breakout around the support level of 1.3069 will provide an opportunity to open long positions with a target for the pair to rise to resistance at 1.3100, which was not achieved yesterday. A breakthrough and a retest from top to bottom of this range will increase the chances of strengthening GBP/USD, leading to the triggering of stop orders from sellers and providing a suitable entry point for long positions with a potential to reach 1.3126. The furthest target will be the area of 1.3152, where I plan to take profit. If GBP/USD declines and buyers do not step in at 1.3069, pressure on the pair will increase, pushing it toward the next support at 1.3038. Only a false breakout there will be a suitable condition for opening long positions. I plan to buy GBP/USD immediately on a rebound from the low of 1.3013, targeting a 30-35-pip intraday correction.
For opening short positions in GBP/USD, the following is required:
Sellers made their presence felt yesterday, but after the weak US data, pressure on the pound decreased. Today, bears need to show themselves around the nearest resistance at 1.3100; if they miss it, they could lose control of the market. A false breakout there will be enough to sell the pound with a target for a decline to support at 1.3069, where moving averages are in favor of bulls. A breakthrough and a retest from the bottom to the top of this range will deal a larger blow to buyers' positions, triggering stop orders and opening the path to 1.3038. The furthest target will be the 1.3013 area, where I will take profit. If GBP/USD moves higher and there is no activity at 1.3100, buyers could push it higher, potentially toward 1.3126. I also plan to open short positions there only on a false breakout. In the absence of downward movement there, I will sell GBP/USD immediately on a rebound from 1.3152, but only with the expectation of a 30-35 pip intraday downward correction in the pair.
Recommended for Review:
Due to the shutdown in the US, fresh data on the Commitment of Traders is not being published. The last relevant data is only as of September 23.
In the COT report (Commitment of Traders) for September 23, there was a decrease in short positions and an increase in long positions. Pressure on the dollar persists, especially after the recent data, which is likely to force the Federal Reserve to continue lowering interest rates. Meanwhile, the Bank of England's policy remains cautious, indicating its clear plans to further combat inflation, though this has not given much confidence to pound buyers lately. The short-term future dynamics of the GBP/USD exchange rate will be determined by new fundamental data. The latest COT report indicated that long non-commercial positions increased by 3,704 to 84,500, while short non-commercial positions decreased by 912 to 86,464. As a result, the spread between long and short positions narrowed by 627.
Indicator Signals:
Moving Averages: Trading is occurring slightly above the 30 and 50-day moving averages, indicating the pound's attempt to return to growth.
Note: The periods and prices of moving averages are viewed by the author on the hourly chart (H1) and differ from the general definition of classic daily moving averages on the daily chart (D1).
Bollinger Bands: In the event of a decline, the indicator's lower boundary around 1.3050 will act as support.
Description of Indicators:
- Moving Average (MA): Determines the current trend by smoothing out volatility and noise. Period – 50. Highlighted in yellow on the chart.
- Moving Average (MA): Determines the current trend by smoothing out volatility and noise. Period – 30. Highlighted 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 that use the futures market for speculative purposes, meeting certain requirements.
- Long Non-commercial Positions: The total long open position of non-commercial traders.
- Short Non-commercial Positions: The total short open position of non-commercial traders.
- Total Non-commercial Net Position: The difference between the short and long positions of non-commercial traders.
