Last Friday, several entry points into the market were formed. Let's look at the 5-minute chart and analyze what happened. In my morning forecast, I focused on the 1.3211 level and planned to make entry decisions based on it. The decline and formation of a false breakout near 1.3211 led to a buying point for the pound. However, after a 14-pip rise, selling pressure returned to the pair. In the second half of the day, a false breakout in the area of 1.3211 provided an excellent opportunity to open new long positions, resulting in a rise of over 40 pips.
To Open Long Positions on GBP/USD:
The lack of data from the UK has sustained demand for risk assets, despite all attempts by bears to trigger a more significant downward correction in the pair at the end of last week. Today, in the first half of the day, data on the PMI index for the UK manufacturing sector, the number of approved mortgage applications, and changes in the M4 money supply are expected. Only very strong data can sustain the rise in GBP/USD. If the pair decreases, I intend to act around the nearest support at 1.3211. Only the formation of a false breakout there will provide a signal to open long positions with the goal of further growth of the pair to resistance at 1.3240. A breakout and a retest from above of this range will increase the chances of GBP/USD strengthening, triggering stop orders for sellers and providing an appropriate entry point for long positions, with the potential to reach 1.3265. The furthest target will be the 1.3300 area, where I plan to take profits. If GBP/USD declines and buyers do not step in at 1.3211, pressure on the pair will increase, leading to a move toward the next support level at 1.3185. Only the formation of 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 at 1.3154, targeting a 30-35-pip intraday correction.
To Open Short Positions on GBP/USD:
Sellers of the pound attempted to rebound slightly, but a major sell-off of the pair did not materialize at the end of November. In the event of strong data on manufacturing activity, I expect the first sign of bears around the 1.3240 resistance level. Only the formation of a false breakout there will provide a reason to sell the pound, targeting a move down to support at 1.3211. A breakout and a retest from below of this range will deal a more significant blow to buyers' positions, triggering stop orders and opening the way to 1.3185. The furthest target will be the 1.3154 area, where I will take profits. If GBP/USD continues to rise and there is no bearish activity at 1.3240, buyers will continue the development of the trend, potentially leading to a surge towards 1.3265. I plan to open short positions there only on a false breakout. If there is no downward movement there, I will sell GBP/USD immediately on a rebound from 1.3300, but only in anticipation of a 30-35-pip downward correction within the day.
Recommendations for Review:
Due to the shutdown in the U.S., fresh data on the Commitment of Traders is not being published. As soon as the updated report is prepared, we will release it. The last available data is from October 7.
In the COT report (Commitment of Traders), short positions have decreased and long positions have increased. Pressure on the dollar remains—especially after the latest data, which will likely compel the Federal Reserve to continue lowering interest rates. Meanwhile, the Bank of England's policy remains cautious, indicating its clear plans to continue the fight against inflation. The short-term future dynamics of the GBP/USD exchange rate will be determined by new fundamental reports. The last COT report indicates that non-commercial long positions increased by 3,704 to 84,500, while non-commercial shorts decreased by 912 to 86,464. As a result, the spread between long and short positions has narrowed by 627.
Indicator Signals:
Moving Averages:
Trading is occurring around the 30 and 50-day moving averages, indicating market uncertainty about direction.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands:
In the event of a decline, the indicator's lower boundary around 1.3211 will serve as support.
Indicator Descriptions:
- Moving Average (MA): Defines the current trend by smoothing out volatility and noise. Period – 50. Marked in yellow on the chart.
- Moving Average (MA): Defines the current trend by smoothing out 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: Total long open position of non-commercial traders.
- Short Non-Commercial Positions: Total short open position of non-commercial traders.
- Total Non-Commercial Net Position: The difference between short and long positions of non-commercial traders.
