GBP/USD: plan for the US session on May 19 (analysis of morning trades)

To open long positions on GBPUSD, you need to:

Due to the low market volatility in the first half of the day, the pair did not manage to reach the indicated levels. In this regard, there were no signals for entering the market. The data released on inflation in the UK in the first half of the day fully coincided with the forecasts of economists, which led to a slight decline in the pound, as many traders bet on a more active recovery in consumer prices, which could affect the Bank of England's plans to make changes to the bond purchase program. If this did not happen, then no one is pleased about buying the pound yet. But we will not drive the market but give it a break. It is still very early to talk about the end of the bullish trend.

The technical picture for the US session remained almost unchanged, as well as the trading strategy. All the bulls need today is a break above the resistance of 1.4201, which was revised from the level of 1.4212. The breakdown and test of this range from top to bottom will lead to the opening of new long positions in the continuation of the upward trend with the nearest goal of reaching the maximum of 1.4257, where I recommend taking the profit. A breakthrough in this area will depend on the publication of the Federal Reserve minutes and the data in it. If the protocol does not bring any surprises, the weakness of the US dollar may return. If the GBP/USD goes beyond 1.4257, the next significant resistance will be seen in the area of 1.4310. In the scenario of a decline in the pound in the second half of the day, the bulls should show themselves in the area of 1.4147. The formation of a false breakout forms an excellent entry point into the continuation of the upward trend. If buyers are not active, the pressure on the pound may return. In this case, I do not recommend rushing to buy. The optimal scenario will be long positions for a rebound from a large low of 1.4078, based on an upward correction of 25-30 points within the day.

To open short positions on GBPUSD, you need to:

The main task of sellers is to return the support of 1.4147 under control. But only its reverse test from the bottom up will lead to the formation of a signal to open short positions in the expectation of a large downward correction to the support area of 1.4078, where I recommend taking the profits. The breakout of the level of 1.4147 will also coincide with the breakout of the moving averages, which indicates the continuation of the bull market. In the case of GBP/USD growth in the second half of the day, only the formation of a false breakout in the area of 1.4201 will lead to a convenient entry point into short positions. If the bulls manage to break above this range, I recommend postponing short positions until the next monthly high is updated in the area of 1.4257.

Let me remind you that the COT reports (Commitment of Traders) for May 11 recorded an increase in both long and short positions. All this happened against the background of a small downward correction of the pair, which was completely recouped after good indicators on the UK economy's contraction rate in the 1st quarter of this year. The growth last month also gave investors hope that the British pound will continue to gain strength. As early as early summer, almost all quarantine restrictions will be lifted in the UK. Given the excellent rate of vaccination against coronavirus, we can assume a sharp recovery in GDP in the 2nd quarter of 2021, which will be the highest in the history of this indicator. Such news strengthens investors' confidence in the British pound and its prospects. The COT report shows that long non-profit positions have grown from 52,262 to the level of 64,947. At the same time, short non-profit positions rose from 32,414 to 36,771, bringing the non-profit net position to 28,176 from 19,848 a week earlier. Last week's closing price also jumped significantly to 1.41308, against 1.39033.

Signals of indicators:

Moving averages

Trading is conducted in 30 and 50 daily averages, which indicates an attempt by the bears to form a downward correction for the pair.

Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.4201 will lead to a new wave of growth of the pound. A break of the lower limit in the area of 1.4150 will increase the pressure on the pound.

Description of indicators