GBP/USD: plan for the European session on November 9. COT reports. Pound returns positions after statements by representatives of the Bank of England

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

Several good market entry points were formed yesterday. Let's take a look at the 5 minute chart and understand the trades. In the first half of the day, forming a false breakout in the 1.3464 area gave an excellent signal to open long positions. This quickly brought the pound back to the 1.3504 resistance area, a breakthrough of which occurred closer to the afternoon during the speech of the Bank of England representatives. A breakthrough of 1.3504 and the test from top to bottom provides another point for opening long positions, which leads to the pound's growth by another 50 points to the 1.3558 area.

Before examining the technical picture of the pound, let's take a look at what happened in the futures market. The Commitment of Traders (COT) reports for November 2 revealed an increase in both short and long positions, reflecting the return of demand for the British pound ahead of the BoE meeting, which took place last week. Considering that there are more bulls and they continue to return to the market, we can count on the continued upward correction of the pair. Many BoE officials are speaking this week and are already starting to make converse statements disagreeing with BoE Governor Andrew Bailey's policies. Let me remind you that after the BoE's November meeting, monetary policy remained completely unchanged, although many traders were betting on tightening it by the end of the year. In this regard, sharp inflationary pressures will continue to support the demand for the British pound. Therefore, I recommend adhering to the strategy of buying the pair in case of very large falls, which will occur against the background of uncertainty in the policy of the central bank. The COT report indicated that long non-commercial positions rose from 51,912 to 57,255, while short non-commercials also strengthened slightly from 36,959 to 42,208. This led to an upward shift in the non-commercial net position. The delta was 15,047 against 14,953 a week earlier. The weekly closing price of GBP/USD dropped significantly as a result of the BoE's policy from 1.3763 to 1.3654.

We expect Bailey's next speech today, who may spoil the plans of the pound bulls for further growth of the pair. Considering that important fundamental statistics do not come out in the first half of the day, most likely the bulls will try to reach the level of 1.3596, on which the further growth of the pair depends. To maintain control over the market, the bulls need to take control of the resistance at 1.3596 as soon as possible. Only a breakthrough and reverse test of this range from top to bottom will generate a buy signal for GBP/USD, which will continue the upward trend and push the pair even higher - to the high of 1.3648. A test of this area will be evidence of the start of a good bullish trend, however, for greater confidence, a consolidation higher is needed. A breakthrough of 1.3648 will open a direct road to new highs: 1.3694 and 1.3754, where I recommend taking profits. If the pair is under pressure in the first half of the day, I advise you not to rush into long positions. An important task for the bulls is to protect support at 1.3533, just below which there are moving averages playing on the side of the bulls. Forming a false breakout there, by analogy with what I discussed above, creates a good entry point to buy. Otherwise, the optimal scenario for opening long positions will be a test of support at 1.3478 - it is also best to wait there for the formation of a false breakout. I advise you to watch long positions of GBP/USD immediately for a rebound only from a low like 1.3426, counting on an upward correction of 25-30 points within the day.

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

The bears tried to protect the market yesterday, but the speech of the BoE representative hurt their plans. Today bears need to think about how to defend 1.3596 - the level to which the pair can get close in today's European session. There is no need to rely on the fundamental data for the UK today, so only the formation of a false breakout in the resistance area of 1.3596 will lead to generating a GBP/USD sell signal, similar to the one I discussed above. The goal is to fall to support 1.3533. A really hot struggle will unfold for this level, since the continuation of the upward correction of the pair depends on it. A breakthrough and a reverse test of this range from the bottom up will form a signal to open new short positions counting on the pair's decline to a low like 1.3478, and then to update the support at 1.3426, where I recommend taking profits. In case the pound rises in the first half and the bears are not active at 1.3596, forming a false breakout in the area of the next resistance at 1.3648 will be a signal to sell GBP/USD. I advise you to open short positions in the pound immediately on a rebound from the high of 1.3694, or even higher - around 1.3754, counting on the pair's rebound down by 20-25 points within the day.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates active attempts of the bulls to return to the market.

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

A breakthrough of the upper border of the indicator in the area of 1.3580 will lead to a new wave of growth of the pound. A breakout of the lower border of the indicator in the area of 1.3533 will increase the pressure on the pair.

Description of indicators