GBP/USD: plan for the US session on December 17 (analysis of morning deals). The pressure on the pound returned after an unsuccessful rise above 1.3336

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

In my morning forecast, I paid attention to the level of 1.3304 and 1.3336 and recommended them to make decisions on entering the market. Let's take a look at the 5-minute chart and figure out the entry point. The decline of the pound in the first half of the day and the formation of a false breakdown around 1.3304 led to a signal to open long positions in continuation of yesterday's bullish trend. It is worth noting that it did not reach the point test of 1.3304, however, given yesterday's momentum, it was safe to enter the market. Then there was an increase of 30 points, where the bulls rested at 1.3336 – and unfortunately, they could not cope with it. A detailed description of the points in the course in the material: The Bank of England raises interest rates. The results of the ECB meeting. The formation of a false breakdown at 1.3336 forced us to close long positions and turn over, as a sell signal for the pound was formed. At the time of writing, the bears have already dumped the pair below 1.3304, and we have passed almost 50 points from the entry point. An additional sell signal will now be formed only in the case of a reverse test of the 1.3304 level, but we will talk about this below. And what were the entry points for the euro this morning?

The release of important fundamental data is not scheduled for the American session, so it is possible that after the breakout of 1.3304, buyers of the pound may fall in. Only a return to this level with a reverse test from top to bottom forms the first entry point into long positions, counting on the repeated growth of the pound in the resistance area of 1.3336. A breakout and a test of 1.3336 will be an equally important task, as going beyond this range will allow the bulls to strengthen their positions to update weekly highs. The top-down test of 1.3336 will give an additional entry point for the purchase of GBP/USD with the prospect of strengthening to 1.3372. A breakdown of this range will also open up an opportunity to update the maximum of 1.3407, where I recommend fixing the profits. The resistance of 1.3446 remains a longer-range target. In the scenario of a further decline in the pound during the US session and an unsuccessful attempt to return to 1.3304, buyers will have problems. However, they should not be called very serious. It is best to focus on purchases when forming a false breakdown in the area of the next support of 1.3271. You can buy GBP/USD immediately for a rebound at the minimum of 1.3243, or even lower - from 1.3209, counting on a correction of 20-25 points within a day.

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

The bears coped with their task perfectly and managed to defend the resistance of 1.3336, forming an excellent entry point there. Now their target is the 1.3304 level. Only a reverse test from the bottom up of this range will give a good entry point for the sale of the pound with a promising further correction of the pair to the area of 1.3271. The minimums will be a more distant target: 1.3243 and 1.3209, the update of which will put an end to yesterday's bull market after the Bank of England's decision to raise rates. If the pair grows during the American session of regaining control over 1.3304, it is best to postpone selling until the resistance is updated again at 1.3336. The formation of a false breakdown there, by analogy with the entry point that I discussed above, will lead to an excellent signal to open short positions. In the absence of bull activity there, I recommend postponing sales to a larger resistance of 1.3372. I also advise you to open short positions there only in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound only from the maximum of 1.3407, or even higher - around 1.3446, counting on the pair's rebound down by 20-25 points inside the day.

In the COT reports (Commitment of Traders) for December 7, a reduction in both short and long positions was recorded. Given the almost equal reduction of positions, this did not lead to serious changes in the negative delta. Poor data on the UK economy, which came out at the end of last week, clearly soured the mood of buyers of risky assets, counting on an upward correction of the pair before the meeting of the Bank of England. This week, the governor of the central bank, Andrew Bailey, will talk about his position on further monetary policy. If it continues to be dovish, most likely, the pressure on the pound will only grow, since representatives of the Federal Reserve System, on the contrary, are going to curtail stimulus measures, which should support the US dollar. High inflation remains the main reason why the Bank of England may change its mind about maintaining stimulus measures, but uncertainty will remain until the publication of the results of the meeting on December 16. An equally serious problem for the UK is a new strain of the omicron coronavirus, which can lead to another lockdown and the closure of the country for quarantine. So far, the authorities have to closely monitor the development of the situation with the new strain, which negatively affects the economy at the end of this year. The COT report for December 7 indicated that long non-commercial positions fell from the level of 52,099 to the level of 48,950, while short non-commercial positions fell from the level of 90,998 to the level of 87,227. This led to the preservation of the negative non-commercial net position almost unchanged: -38,277 versus -38,899 a week earlier. The weekly closing price sank slightly from 1.3314 to 1.3262.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily moving averages, which indicates an attempt by bears to return to the market.

Note: The period and prices of 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

In the case of growth, the upper limit of the indicator around 1.3336 will act as resistance.

Description of indicators