In my morning forecast, I paid attention to the 1.2310 level and recommended making decisions from it. Let's look at the 5-minute chart and figure out what happened there. An unsuccessful attempt to rise above 1.2310 led to the formation of a false breakdown, which in turn gave signals to sell the pound. At the time of writing, all the bears managed to do was move down 25 points from the entry point. In fairness, it should be noted that the pressure on the pound remains, and while trading will be conducted below this range, we can expect a drop to 1.2242. It was not possible to get a signal to open long positions there in the first half of the day, since there were a couple of points missing before the test. And what were the entry points for the euro?
To open long positions on GBP/USD, you need:
Strong data on the index of national activity of the Federal Reserve Bank of Chicago and home sales in the secondary market of the United States, together with hawkish statements by the representative of the Federal Reserve System Loretta Maester, will lead to the formation of pressure on the British pound. Therefore, the primary task of the bulls will not be a breakthrough of 1.2310 – a new resistance level formed at the end of the first half of the day, but the protection of the nearest support of 1.2242, where the pair is heading now. In the event of a major fall in the pound in the afternoon, only the formation of a false breakdown at 1.2242 there will give a signal to open new long positions in the expectation of continued growth of the pair and a return to 1.2310. This is the only way to build the lower boundary of the new bullish channel. The 1.2310 level turned out to be critically important for the bulls. Therefore, a breakout and a top-down test of this range will give a buy signal based on an update of 1.2400, and then an exit to a new maximum of 1.2452. A similar breakthrough at this level will lead to another entry point into long positions with the prospect of updating 1.2484, where I recommend fixing the profits. A more distant target will be the 1.2516 area. If GBP/USD falls and is absent at 1.2242 after strong statistics, the pressure on the pair will increase. There are also moving averages that play on the side of the bulls, so if buyers miss this level, they will face serious problems. In this case, I advise you to open new long positions only on a false breakdown from 1.2174. You can buy GBP/USD immediately for a rebound from 1.2102, or even lower – around 1.2030 with the aim of correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
The bears coped with the task and defended 1.2310. Now they need to return to the level of 1.2242 formed by the results of the morning session as soon as possible. Only a consolidation below 1.2310 and a reverse test from the bottom up will give an entry point into short positions with the prospect of a decline to 1.2174, which will lead to the surrender of buyers. A more distant target will be the 1.2102 area, where I recommend fixing the profits. We will be able to reach it only in the case of very good statistics for the United States. With the GBP/USD growth option, the bears will probably show themselves again in the resistance area of 1.2310. However, you need to understand that this level has already worked itself out, and in the absence of sellers' activity and a long "crush" around 1.2310, I advise you to postpone short positions. Only another false breakout at 1.2310 will give a new entry point to short positions in the expectation of a resumption of the downward trend. In case of further growth of GBP/USD, another upward jerk may occur against the background of the demolition of stop orders of speculative sellers. In this case, I advise you to postpone short positions to 1.2400. But even there, I advise selling the pound only in case of a false breakdown, since going beyond this range will increase demand for GBP/USD. Short positions can be viewed immediately for a rebound from 1.2452, or even higher – from 1.2484, counting on the pair's rebound down by 30-35 points inside the day.
The COT report (Commitment of Traders) for June 14 recorded a reduction in both long and short positions, which led to a slight decrease in the negative delta. After the meeting of the Bank of England, at which it was announced that it would adhere to the previous plan to raise interest rates and combat high inflation, the pound strengthened its position, which will affect future COT reports. For sure, the big players are taking advantage of the moment and buying back the much cheaper pound, despite all the negative things that are happening with the UK economy right now. However, one should not rely too much on the pair's recovery in the near future, since the policy of the Federal Reserve System will seriously help the US dollar in the fight against risky assets. The COT report indicates that long non-commercial positions decreased by 5,275, to the level of 29,343, while short non-commercial positions decreased by 10,489, to the level of 94,939. This led to a decrease in the negative value of the non-commercial net position from the level of -70,810 to the level of -65,596. The weekly closing price decreased to 1.1991 against 1.2587.