In my morning forecast, I drew attention to the level of 1.2480 and recommended making decisions based on it for market entry. Let's look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.2480 led to a buy signal, but after a 15-point upward movement, pressure on the pair returned. The technical picture was reassessed for the second half of the day.
To open long positions on GBP/USD, the following is required:
The absence of statistics kept the pound within a sideways channel, although buyers showed themselves around 1.2480. The second half of the day will focus on US labor market data and producer price figures. In the case of further GBP/USD decline amid strong data, I plan to act against the bearish market only if a false breakout forms at 1.2468 – a new support formed after the European session. Only this will provide an entry point for buying with a target of 1.2503 resistance. Breaking through and securing above this range will restore confidence to buyers, signaling a buy with a target of 1.2543. The more distant target is the area of 1.2581, where I will take profit. In the scenario of a decline and the absence of bulls at 1.2468 in the second half of the day, which is quite possible, especially if US inflation is much higher than economists' forecasts, things will go very poorly for buyers. In this case, only the protection of the next area at 1.2436 and a false breakout there will signal the opening of long positions. I plan to buy GBP/USD on a rebound only from the minimum of 1.2395 with a 30-35 point intraday correction target.
To open short positions on GBP/USD, the following is required:
Bears need to defend the nearest resistance at 1.2503, just below which the moving averages pass, which will be enough to expect the renewal of monthly lows after US inflation data. Selling GBP/USD will only be done after an unsuccessful consolidation at 1.2503, leading to a decline to the area of 1.2468. Breaking through and testing this range from bottom to top will deal a more serious blow to bull positions, providing an opportunity to build a downward trend with a minimum renewal at 1.2436. The more distant target remains the area of 1.2395, where I will take profit. In the scenario of GBP/USD rising and the absence of activity at 1.2503 in the second half of the day, bulls can quickly seize the initiative. In this case, I will postpone sales until a false breakout at 1.2543. Without downward movement, I will sell the pound on a rebound from 1.2581, but only in anticipation of a pair correction downwards by 30-35 points within the day.
The COT report (Commitment of Traders) for September 5th showed a decrease in both long and short positions. Governor of the Bank of England Andrew Bailey's statements made a lot of noise, leading to a fairly active decline in the pound last week. Hints of a likely abandonment of further aggressive policies in favor of maintaining the pace of economic growth were not welcomed by buyers, as it is evident that the US Federal Reserve, which has made much greater progress in combating inflation, has no plans to do the same. The difference in interest rates maintains the dollar's attractiveness and puts pressure on the pound. However, a significant sell-off in GBP/USD can be exploited by buyers at any time because the lower the pound, the more attractive it is for medium-term purchases. The latest COT report mentioned that non-commercial long positions decreased by 4,498 to 92,645, while non-commercial short positions decreased by 2,481 to 46,261. As a result, the spread between long and short positions increased by only 15. The weekly price dropped to 1.2567 from 1.2624.
Indicator Signals:
Moving Averages:
Trading occurs just below the 30 and 50-day moving averages, indicating the likelihood of further pound depreciation.
Note: The author considers the period and prices of moving averages on the H1 hourly chart, which differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of a decline, the lower boundary of the indicator, around 1.2465, will act as support.
Description of Indicators:
• Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving Average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands. Period 20.
• Non-commercial traders - speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
• Long non-commercial positions represent the total long open positions of non-commercial traders.
• Short non-commercial positions represent the total short open positions of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.