In the morning, I considered entering the market at 1.1466. Let's take a look at the M5 chart to get a picture of what happened. Bears pushed GBP to the area of 1.1466. The formation of a false breakout there produces a nice buy entry point. Although I had expected the uptrend to extend, it did not happen. Luckily, I managed not to incur losses. Technically, the situation for the second half of the day has changed.
When to go long on GBP/USD:
I no longer focus on the 1.1466 mark. Clearly, the instrument is likely to continue trading around this level, as no important macro events are scheduled for the second half of the day. Therefore, I decided that it would be wiser to shift my focus elsewhere. A statement from a FOMC official, as well as the NFIB Business Optimism results, will hardly affect the market. Meanwhile, the US midterm elections will be at the center of traders' attention. If the pair goes down further, I will consider selling the instrument after a false breakout through 1.1420 support. This may produce a buy signal, with a target at 1.1534 resistance. After a breakout through 1.1534 and its retest from top to bottom, the price is likely to go to 1.1603, with a target at 1.1666 resistance. In such a case, all hopes of bears for a correction would go in vain. Should GBP/USD go down when there is no bullish activity at 1.1420, the pair will approach the 1.1358 low. In this light, there is no point in rushing to enter the market. A false breakout through 1.1358 would mark the presence of major players. Then, I will consider buying GBP/USD at 1.1292, or at the 1.1207 low, on a bounce, allowing a correction of 30-35 pips intraday.
When to go short on GBP/USD:
Bears are pushing GBP to 1.1420 support, where we are likely to see a profit-taking process and an increase in buying pressure. In the second half of the day, I will consider selling the instrument after a false breakout through 1.1534 only, as this may cause a rise in pressure, which may push GBP to 1.1420 support. A break and a bottom-top retest of this range, along with hawkish statements by Fed officials, may create a sell entry point with a target at the 1.1358 low. A more distant target stands at 1.1292 where it is wiser to lock in profits. If GBP/USD goes down and there is no bearish activity at 1.1534 in the second half of the day, demand for GBP may soar. In such a case, the pair may head towards the 1.1603 high. A false breakout through the barrier is likely to crease a sell entry point and lead to the extension of the downtrend. If there is no activity there, GBP/USD may surge to the 1.1666 high where it will become possible to go short, allowing a bearish correction of 30-35 pips intraday.
Commitments of Traders:
B COT report for November 1 logged a decrease in the number of long and short positions. Perhaps the drop came due to the Bank of England's and the Federal Reserves meeting, which briefly boosted the dollar. The latest COT report does not take into account their interest rate decisions. The BoE's rate hike came in line with economists' expectations. Governor Bailey said the regulator was ready to halt aggressive tightening due to a continuing slowdown in economic growth. He also expressed fear that the situation with the cost of living in the UK might soon be aggravated by a real estate crisis. In this light, the aggressive Federal Reserve and the cautious Bank of England triggered a mass sell-off in GBP. Meanwhile, a steep fall in the US labor market last week reminded the Federal Reserve that it should act more cautiously in the near future. According to the latest COT report, long non-commercial positions dropped by 8,532 to 34,979, while short non-commercial positions decreased by 11,501 to 79,815. As a result, the non-commercial net position came at -44,836 versus -47,805 a week earlier. The weekly closing price rose to 1.1499 from 1.1489.
Indicator signals:
Moving averages
Trading is carried out above the 30-day and 50-day moving averages, reflecting a developing bullish market.
Note: The period and prices of moving averages are viewed by the author on the hourly chart and differ from the general definition of classic daily moving averages on the daily chart.
Bollinger Bands
Resistance is seen at around 1.1534, in line with the upper band.
Indicator description:
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.Bollinger Bands. Period 20Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.Long non-commercial positions are the total long position of non-commercial traders.Non-commercial short positions are the total short position of non-commercial traders.Total non-commercial net position is the difference between the short and long positions of non-commercial traders.