GBP/USD: trading plan for New York session, November 15 (analysis of morning positions). Bulls hold price above 1.1452 but demand remains low

In my morning forecast I paid attention to the level of 1.3404 and recommended to open long positions from it. Let's have a look at the 5-minute chart and analyze the trades. The downward correction of the pair after the sharp increase, observed during the Asian session, led to a false breakout of 1.3404 and a signal to open long positions. However, I have not waited for a considerable growth of the pound, as demand is obviously not at its highest level. While the pair is trading above 1.3404, a bullish scenario and the growth of the pair is likely to happen. It would be better to move stop-loss orders to the area with no losses. From the technical point of view, nothing has changed.

The US data scheduled for this afternoon may not help traders much. A weak report on the Empire State Manufacturing Index may encourage pound buyers to take new action. Today, there will be an important parliamentary hearing on the Bank of England's monetary policy report, as well as central bank governor Andrew Bailey's speech. All above may significantly influence the pound's trend. In case of tightening of the BoE monetary policy, we might expect a further recovery of the pair. However, it is better to keep an eye on the situation around the Brexit agreement, as it does not bolster the confidence of the pound buyers. In the second half of the day, the main target for bulls is to hold the price above 1.3404, and they succeeded during the European session. A false breakdown together with the test of the moving averages, which are located a little bit lower, may signal buying the pound against the trend. This is likely to bring back the chance of the pair's upward correction to the area of 1.3458. A breakout and the reverse test top/bottom of the 1.3458 level will give an additional signal to buy the pound, which may drag the pair to the area of 1.3522 with the prospect of reaching the high of 1.3567, where traders can generate profit. If the pair declines in the second half of the day, a test of the next support at 1.3354 may become a perfect mark for opening long positions. However, I also recommend to open long positions there only after a false breakout. Opening long positions on the GBP/USD pair on the rebound is possible from a new low at 1.3308, or even lower from support at 1.3254, allowing an intraday correction of 25-30 pips.

Bears are trying to regain control of the market. However, their attempt to break through 1.3404 failed. If Bailey continues to maintain soft policy, the pressure on the pound will probably increase in the second half of the day, and the situation with Brexit and rising inflation may only worsen the situation. Moreover, a return of the downtrend may happen if the price is held below resistance at 1.3458. An entry point for short positions may occur only after the formation of a false breakout at that level with the subsequent decrease of the pair to the area of 1.3404. A breakout of 1.3404 is no less important for the sellers. A test of that level bottom/top is likely to form an additional signal for opening short positions with the aims at lows of 1.3354 and 1.3308, where traders may take profit. If the pair grows after the speech of the Governor of Bank of England and absence of long positions volumes at 1.3458, it is better to postpone selling until the price reaches resistance at 1.3522. It is possible to open short positions on a rebound from 1.3567 or even higher from the new high at 1.3605, allowing a 20-25 pips pullback.

The COT (Commitment of Traders) reports for November 2 showed an increase in both short and long positions, which reflected the return of demand for the GBP before the Bank of England's meeting last week. Taking into account that there were more buyers and they keep returning to the market, the upward correction of the pair is likely to continue. This week there are many representatives of the Bank of England who are disagreeing with the policy of governor Andrew Bailey. After the November meeting of the Bank of England, the monetary policy has remained unchanged, although many traders count on its policy tightening by the end of the year. The sharp inflationary pressure may continue to support demand for the British pound. Therefore, it is better to open long positions during large falls, which may occur amid the uncertainty in the central bank's policy. The COT report indicated that long non-commercial positions rose to 57,255 from 51,912, while short non-commercial positions slightly increased to 42,208 from 36,959. This led to an upward change in the nonprofit net position. The delta was 15,047 versus 14,953 a week earlier. The weekly closing price of the GBP/USD pair dropped significantly to 1.3654 from 1.3763 as a result of the Bank of England policy.

Moving Averages

The pair is trading above the 30 and 50 day moving averages, which may trigger an upward correction.

Note: The period and prices of moving averages viewed by the author on the 1H differ from the general definition of the classic daily moving averages on the daily chart.

Bollinger Bands

A breakout of the upper band of the indicator at 1.3435 may result in a new growth wave of the pound. A breakout of the indicator's lower band at 1.3404 is likely to increase pressure on the pair.

Description of indicators