GBP/USD: trading plan for the American session on February 22 (analysis of morning deals)

I focused on the level of 1.2065 when I made my morning forecast and suggested trading decisions based on it. Let's analyze the 5-minute chart to see what happened. At this level, the decline and the formation of a false breakout resulted in the development of a buy signal, but it never resulted in a strong upward movement. Buyers once again adopted a wait-and-see position after the market rose by 20 points, which is bad news for those who anticipate that the upward correction will continue. The technical situation barely changed in the afternoon.

You require the following to open long positions on the GBP/USD:

The Federal Reserve System meeting that took place in February is the topic of discussion, but I don't think that will have a significant impact on the market. The pound will at best gain support until it becomes clear that fewer people favor maintaining an aggressive monetary policy than favor gradually "loosening their hold." The likelihood of a pound recovery persists until trading is done above 1.2065. Nonetheless, I won't give this level any more serious consideration. You won't be able to find an entry point to buy with the possibility of a return to 1.2122 until after the next formation of a false breakout in the afternoon. Only after this range has been fixed and tested from top to bottom against the backdrop of the unexpectedly soft Fed policy will I bet on the GBP/USD continuing to rise to 1.2177. A pullback above this level will also bring growth opportunities to 1.2220, where I've fixed profits. The bears will retake control of the market and put more pressure on GBP/USD if the bulls are unable to complete the tasks assigned to them and miss 1.2065 in the afternoon, which is also likely given the aggressive stance of the Federal Reserve System. In this scenario, I suggest that you wait before making any purchases and only start long positions around the next support level of 1.2028 and only in the event of a false drop. I'll buy GBP/USD right away only if it rises over the monthly low of 1.1988 with the intention of a correction of 30-35 points during the day.

For opening short positions on the GBP/USD, you will need:

The pound fell to about 1.2065 after sellers completed the tasks assigned for the morning. It's time to accomplish this level as well. Dealing with this will be simple thanks to the hawkish Fed policy. Of course, under the circumstances, the ideal scenario would be the development of a false breakout around 1.2122, a new resistance level created by the outcomes of the first half of the day. The target will be a breach of the support level of 1.2065 since a breakthrough and a reversal test of this level will negate buyers' plans for a further upward correction, strengthening the position of bears in the market and forming a sell signal with a decline to 1.2028. The area of 1.1998, whose update would show the presence of major concerns for buyers, will be the farthest aim. I'll set the profit there. Given the possibility of a GBP/USD rise and the absence of bears at 1.2122 in the afternoon, bulls may continue to actively enter the market. I suggest that you take your time with sales and turn your attention to 1.2177. Only a false breakout creates an entry point into short positions. If there is no movement at this price, I will sell GBP/USD right away at the highest price of 1.2220, but only if I believe the pair will rebound by 30-35 points during the day.

The CFTC has been experiencing a technical issue that has prevented the publication of new COT reports for more than two weeks. The most recent data is for January 24.

Both long and short positions were dramatically reduced in the COT report (Commitment of Traders) for January 24. But, given the difficulties the UK government is presently facing (fighting strikes and demands for wage increases while still attempting to achieve a continuous fall in the inflation rate), the current reduction was within an acceptable range. Yet, for the time being, all of this is receding into the background as we wait for meetings of the Federal Reserve System, whose policy is anticipated to be less aggressive, and the Bank of England, whose pronouncements are certain to keep an aggressive tone by raising the rate by 0.5% once more. All of this will have a good impact on the British pound, therefore, I expect it to rise more unless something unusual occurs. According to the most recent COT data, long non-commercial positions declined by 6,713 to 34,756, while short non-commercial positions decreased by 7,476 to 58,690, resulting in a fall in the non-commercial net position's negative value to -23,934 from -24,697 a week earlier. We will continue to keep a careful eye on the economic indicators for the UK and the decision made by the Bank of England because such insignificant changes do not dramatically alter the balance of power. In contrast to 1.2290, the weekly ending price increased to 1.2350.

Signals from indicators

Moving Averages

Trade is concentrated around the 30 and 50-day moving averages, a sign that the market is unsure about its course.

Note that the author's consideration of the period and costs of moving averages on the hourly chart H1 differs from the standard definition of the traditional daily moving averages on the daily chart D1.

Bands by Bollinger

The indicator's upper bound, which is located at 1.2130, will serve as resistance in the event of growth.

Description of indicators