GBP/USD: plan for the European session on June 17 COT reports. Bulls did their best to save the market, but alas

To open long positions on GBP/USD, you need:

The Federal Reserve's unexpected forecasts on the change in interest rates in the United States as early as next year led to a sharp strengthening of the US dollar against the British pound, although in the first half of the day, the bulls gave hope for a recovery in the pair. Let's take a look at the 5 minute chart and understand the entry points.

It is clearly seen how a false breakout in the resistance area of 1.4097 creates an excellent signal to open short positions, which leads to a slight decline in the British pound in the first half of the day. However, strong data on inflation in the UK brought buyers back into the market, leading to a breakthrough and growth above the resistance of 1.4097. Its reverse test from top to bottom created an excellent entry point into long positions in continuation of the upward trend and at the time of this writing, the pair has gone up about 20 points. Those who were waiting for an accurate test of the 1.4097 level (including myself) missed the long position, since one point was not enough before the level was updated.

In the afternoon, the bears defended the level of 1.4128 (from which I advised to sell the pound), where an excellent entry point to short positions was formed and it was also after the Fed's decision that it fell by more than 150 points. A breakthrough and consolidation below 1.4037 with a reverse test of this level created an additional entry point for short positions in continuation of the bearish trend.

Important data for the UK will not be released today, so the focus will be on the technical picture of the GBP/USD pair. A breakthrough of the 1.4060 level proved to be catastrophic for the bulls, and now it is difficult to believe that the pair will be able to quickly return to last month's highs. The initial task for today is to protect the support at 1.3972, which kept the pair from falling further yesterday. Forming a false breakout there will be the first signal to open long positions in order to restore GBP/USD to the resistance area of 1.4019, where the bulls may already have problems. A breakthrough and consolidation above the level of 1.4019 will open a direct road to the resistance at 1.4058, where the moving averages that play on the side of the bears pass. I recommend taking profit there. With a decline to the 1.3972 area and if the bulls are not active there, which is likely given the bearish market we are currently seeing, then it is best to postpone long positions until the 1.3921 low is renewed. It is also possible to buy the pound immediately upon a rebound from the level of 1.3878, counting on an upward correction of 20-25 points within the day.

To open short positions on GBP/USD, you need:

The bears have one task - a breakthrough and consolidation below the support of 1.3972. The moment that, thanks to the Fed, the bears were able to take control of the market, could result in creating a powerful downward momentum in GBP/USD. To do this, you just need a breakthrough and a test of the 1.3972 level from the bottom up, which will indicate the formation of a new entry point into short positions and allow GBP/USD to get out to new local lows of 1.3921 and 1.3878. The 1.3839 level is still a target, which is where I recommend taking profits. If GBP/USD rises in the first half of the day, an upward correction would be an excellent option for building up short positions. Forming a false breakout in the area of 1.4019 will be the first signal to sell the pound. If the bears are not active, then I recommend postponing short positions until the test of the larger area of 1.4058, where you can sell the pound immediately on a rebound, counting on a downward correction of 20-25 points within the day. Moving averages that play on the side of the bears also pass in this range.

The Commitment of Traders (COT) reports for June 8 showed that both long and short positions decreased, but this did not negatively affect the positive delta, but on the contrary, it even increased due to a larger reduction in sellers' positions. This indicates the presence of a fairly large interest of buyers with each decline in the pound. Similar statements from representatives of the Bank of England no longer work, and the market reacts rather weakly even to the speeches of Governor Andrew Bailey. Without real changes and adjustments to the bond buying program by the central bank, it will be quite difficult for the British pound to get out of the horizontal channel, in which it has been in for almost a month. An important moment will be the full opening of the UK economy, which is scheduled for the 20th of this month. The spread of the Indian strain of the coronavirus in the territory creates a number of obstacles to this, which affects the desire of investors to buy the British pound. The best scenario is to buy for every good decline in the British pound against the US dollar. The COT report indicated that long non-commercial positions fell from 64,204 to 59,238, while short non-commercial positions fell much more strongly from 40,079 to 31,524. As a result, the non-commercial net position rose from 24,125 to 27,714. Last week's closing price changed significantly and amounted to 1.41757 against 1.42270.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates a bear market and a possible succeeding decline from the pound.

Moving averages

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

Bollinger Bands

In case of an upward correction, the indicator's average border in the area of 1.4040 will act as a resistance. The lower border of the indicator in the area of 1.3921 will restrain the pound from falling further.

Description of indicators