GBP/USD: trading plan for the US session on September 21st (analysis of morning deals). The pound continues to fall ahead of the Bank of England meeting

In my morning forecast, I pointed out the level of 1.2306 and recommended making trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at 1.2306 provided a signal to buy. Still, I refrained from entering against the bearish market, considering that I am betting on a further decline in the pair after the Bank of England meeting, as I mentioned in the morning forecast. In the second half of the day, the technical picture completely changed.

To open long positions on GBP/USD, the following is required:

Defending the support at 1.2282 will likely lead to an entry point for long positions. However, much depends on the Bank of England's decision. Only after determining the regulator's position in the future can we forecast further movements in GBP/USD. I provided more details on what to expect in my morning forecast. As for short-term prospects, only the formation of a false breakout around 1.2282, similar to what I discussed earlier, will provide an entry point for long positions, assuming a firm stance by the Bank of England and further interest rate hikes. In this case, the target will be resistance at 1.2327, just above the moving averages, favoring sellers. Only a breakthrough and consolidation above this range will restore buyer confidence, providing a signal to open long positions with an exit at 1.2375, where I expect the presence of larger sellers. The ultimate target will be the area around 1.2419, where I will take profits. Reaching this level will only be possible after the publication of new forecasts by the British regulator. In the scenario of a decline to 1.2282 and the absence of buyer activity there in the second half of the day, pressure on the pound will only increase, paving the way for new monthly lows. In this case, only defending 1.2237, as well as a false breakout there, will provide a signal to open long positions. I plan to buy GBP/USD only on a rebound from 1.2192 with the aim of a 30-35 point intraday correction.

To open short positions on GBP/USD, the following is required:

Only defending the new resistance at 1.2327, as well as a false breakout at this level in the second half of the day after the Bank of England's decision and comments from Governor Andrew Bailey, will be a suitable entry point for short positions, opening the way back to the monthly minimum of 1.2282. A breakthrough and retest from below this range will deliver a new serious blow to bullish positions, providing an opportunity for a drop toward support at 1.2337. The ultimate target remains around 1.2192, where I will take profits. In the scenario of GBP/USD rising and the absence of activity at 1.2327, buyers will have an excellent opportunity for a correction, especially if the British regulator maintains a firm position. In this case, I will postpone selling until a false breakout at 1.2375. If there is no downward movement, I will sell the pound immediately on a rebound from 1.2419, but only counting on a pair's intraday correction of 30-35 points.

Indicator Signals:

Moving Averages

Trading is taking place below the 30 and 50-day moving averages, indicating further decline in the pair.

Note: The author examines 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 case of a decline, the lower boundary of the indicator, around 1.2275, will serve as support.

Description of Indicators