GBP/USD: plan for the US session on July 18 (analysis of morning deals). The pound continues to rise

In my morning forecast, I paid attention to the 1.1964 level and recommended deciding to enter the market. Let's look at the 5-minute chart and find out what happened there. A very big increase in the pound and a breakthrough of 1.1915 occurred without a reverse test, so it could not get an entry point into long positions there. However, I managed to sell successfully for a rebound at the price of 1.1964, which I paid careful attention to in the morning. After that, the negative movement was more than 30 points. In the afternoon, the technical picture shifted.

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

Now there is a vigorous struggle for the resistance of 1.1980, on which a lot will depend. In the second half of the day, there are no figures that would support the dollar, and the data on the NAHB housing market index and the capital account balance will certainly be ignored. Of course, the most desirable and acceptable situation would be to buy the pound after its downward correction to the nearest support area at 1.1938. In the development of a false breakdown, there will be an ideal signal to open long positions to further return to the area of the daily maximum of 1.1980, formed at the end of the first half of the day. A breakthrough of 1.1980 and a reverse test from top to bottom will create more robust upward momentum, giving a buy signal to jump and update on 1.2018. A comparable breakthrough at this level will offer the chance of reaching 1.2050, where I recommend fixing the profits. A more distant aim will be the 1.2084 area, which will be an obvious application for embedding a new upward trend. If GBP/USD falls and there are no buyers at 1.1938, this will intensify the pressure on the pair. With this method, I advocate deferring long positions till 1.1900. I encourage you to invest only in a false breakdown. It is feasible to initiate long bets on GBP/USD immediately for a rebound from 1.1856, where the moving averages are, or even lower – around 1.1810, with the aim of a correction of 30-35 points within a day.

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

Sellers are not showing themselves yet, letting everything take its course. The big players came out last week, taking advantage of favorable statistics and purchases from speculators, and now the upward trend is formed mainly due to stop orders. The optimum scenario for establishing short positions will be a false breakout at 1.1980, which will raise pressure on the pair with the aim of a wider slide to the critical support of 1.1938. In the absence of bull action and consolidation below, the reverse test from the bottom up will present an extra entry point for the pound sale with a fall to 1.1900, where I recommend partially fixing profits. A more distant aim will be the 1.1856 area, in the area of which buyers will try to create the lower border of a new rally. With the prospect of additional development of GBP/USD and the absence of bears at 1.1980 in the afternoon, the situation will continue on the buyers' side after bad statistics in the US. In this instance, I encourage you not to rush with sales. Only a false breakout in the next resistance area on 1.2018 will enable an entry point to short positions in the expectation of a comeback of the pair. In case of absence of activity, another upward surge may occur there. With this option, I recommend delaying short positions until 1.2051, at which point you can sell GBP/USD immediately for a comeback, betting that the pair would drop 30-35 points in a day.

The COT report (Commitment of Traders) for July 5 revealed an increase in both short and long positions. However, the increase in short holdings was significantly larger, resulting in a rise in the negative delta. A second attempt to repurchase the annual minimum failed as it became clear that the Bank of England plans to continue fighting inflation by increasing interest rates, further slowing the British economy and putting it into recession. The crisis of the rising cost of living in the United Kingdom continues to worsen, and the recent resignation of British Prime Minister Boris Johnson is unlikely to provide quick relief. The only criterion for purchasing the British pound is updating its annual lows. Since there are no such economic issues in the United States, the Federal Reserve System's policy and its rate of interest rate hikes provide far more support for the dollar. Recent figures on the US job market for June corroborated this. According to the COT report, long non-commercial positions climbed by 4,434 to 39,618. In contrast, short non-commercial positions increased by 7,524 to 95,826, resulting in a rise in the negative value of the non-commercial net position to -56,208 from -53,118. The weekly ending price declined to 1.1965 from 1.2201 last week.

Moving Averages

Trading is done above the 30-day and 50-day moving averages, indicating a continuation of the pair's downturn.

The author considers the period and prices of moving averages on the hourly chart H1, which differs from the standard definition of daily moving averages on the daily chart D1.

Bollinger Bands

The average boundary of the indicator around 1.1900 will provide support in the event of a downturn.

Description of indicators