GBP/USD: the plan for the American session on January 24 (analysis of morning deals). The data disappointed - the pound aimed at 1.3490

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

In the first half of the day, I paid attention to the 1.3532 level and made decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. The buyers of the pound did everything possible to build an upward correction for the pair, but this time nothing came of it. A false breakdown at 1.3532 during morning trading led to a signal to buy the pound, but the data on activity in the services and manufacturing sector of the UK disappointed, which led to a breakdown of 1.3532 and a further fall in GBP/USD. In the afternoon, the technical picture changed slightly. And what were the entry points for the euro this morning?

The focus will certainly be on the data on the American economy. The main goal of the bulls for the second half of the day is now to regain control over the resistance of 1.3532, which acted as support in the morning. However, before that, you need to try very hard not to let the pound fall below the level of 1.3490, to which the pair is rapidly declining at the time of writing. Only the formation of a false breakdown at 1.3490, together with poor data on the index of business activity in the manufacturing sector, the index of business activity in the services sector, and the composite index of the US PMI will lead to the first entry point into long positions against the bear market that we have been observing since the end of last week. If there is no active growth of the pair from 1.3490, you can buy the pound immediately for a rebound only from the next support of 1.3461, or even lower - from the minimum of 1.3431, counting on a correction of 20-25 points within the day. If buyers manage to regain control over the level of 1.3532, only a breakthrough and a reverse test from the top-down of this range will lead to the formation of a signal to buy the pound with the prospect of updating today's maximum in the area of 1.3574, where the moving averages are. A more distant target will be the 1.3614 area.

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

The bears are still actively showing themselves and have achieved the tasks set for them in the first half of the day. Weak statistics in the face of another increase in interest rates in the UK is a wake-up call for the economy, as the decisions taken by the central bank may slow down its growth much more than economists expected. The initial task of the bears will be to protect the resistance of 1.3532, to which the pound may return with weak data on the US economy. If the pair grows during the American session, only the formation of a false breakdown at this level forms the first entry point into short positions, followed by a fall to the area of 1.3490. Strong US data and taking control of this level will give a new entry point into short positions, counting on the decline of GBP/USD by 1.3461 and 1.3431, where I recommend fixing the profits. In case of growth of the pair and weak activity of sellers at 1.3532, I advise you to postpone sales until the next major resistance at 1.3574, where the moving averages are. It is also possible to open short positions there only with a false breakdown. I advise selling GBP/USD immediately for a rebound from 1.3614, or even higher - from this month's maximum in the area of 1.3656, counting on the pair's rebound down by 20-25 points inside the day.

The COT reports (Commitment of Traders) for January 11 recorded an increase in long positions and a reduction in short positions - which indicates the continued attractiveness of the pound after the Bank of England raised interest rates at the end of last year. If you look at the overall picture, the prospects for the British pound look pretty good, and the observed downward correction makes it more attractive. The Bank of England's decisions continues to support buyers of risky assets in the expectation that the regulator will continue to raise interest rates this year, which will push the pound even higher. High inflation remains the main reason why the Bank of England will continue to tighten its monetary policy. Last week, Federal Reserve Chairman Jerome Powell said that he would not shape events and rush to raise interest rates, especially given the sharp decline in retail sales in December last year, which should cool down inflationary pressure a little. This led to a decrease in demand for the US dollar, which will allow buyers of the pound to continue building an upward trend. The COT report for January 11 indicated that long non-commercial positions increased from the level of 25,980 to the level of 30,506, while short non-commercial positions decreased from the level of 65,151 to the level of 59,672. This led to a change in the negative non-commercial net position from -39,171 to -29,166. The weekly closing price rose from 1.3482 to 13579.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates a further decline in the pound trend.

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 average border of the indicator in the area of 1.3545 will act as resistance.

Description of indicators