GBP/USD: trading plan for the US session on December 6th (analysis of morning deals). The pound awaits Andrew Bailey's speech

In my morning forecast, I highlighted the level of 1.26580 and recommended making entry decisions based on it. Let's look at the 5-minute chart and analyze what happened. The decline into this range occurred, but due to low market volatility, a false breakout was not formed. Considering that none of the support and resistance levels were updated in the first half of the day, the technical picture remained unchanged for the second half.

To open long positions on GBP/USD:

Ahead of us is the speech by the Governor of the Bank of England, Andrew Bailey, so let's see the market reaction. After this, the report on the ADP employment change in the U.S. private sector and the trade balance will be released. The direction of the dollar will depend on the labor market figures. If the numbers indicate job growth and Bailey is soft in his assessments, the pressure on the pair will likely return. If this happens, I will act according to the morning scenario: a decline and the formation of a false breakout around the nearest support of 1.2580, formed yesterday, will provide a buying entry point with the target of the GBP/USD recovery and an update of the area around 1.2616, where the moving averages supporting sellers are located, restricting further upward potential for the pair. Breaking through and consolidating above this range will bring demand back to the pound and open the way to 1.2646. The ultimate target will be the area of 1.2682, where I would take profits. In the scenario of further pair declines after Bailey's speech and no bull activity at 1.2580 in the second half of the day, trading will move within the bounds of a new descending channel. In this case, only a false breakout around the next support of 1.2545 will signal the opening of long positions. I plan to buy GBP/USD only on a rebound from 1.2503 to correct 30-35 points within the day.

To open short positions on GBP/USD:

In this situation, sellers can only hope and believe: believe that Bailey will continue to talk about the need to maintain the monetary policy at its current highs for an extended period, as well as the weak ADP labor market report in the U.S. I plan to sell only after the formation of a false breakout at 1.2616 today, which will give a chance for a downward movement to the support at 1.2580. Only breaking through and reverse testing from the bottom to the top of this range will deal a more serious blow to the bull positions, removing stop orders and opening the way to 1.2545. The more distant target will be the area of 1.2503, where I would take profits. Testing this level will indicate the developing of a new bearish trend for the pound. With an increase in GBP/USD and no activity at 1.2616 in the second half of the day, buyers will reclaim the market and try to pull the pair into a new, wider sideways channel. In this case, I will postpone sales until a false breakout at the level of 1.2646. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.2682, but only counting on a pair correction down by 30-35 points within the day.

Indicator Signals:

Moving Averages:

Trading is below the 30- and 50-day moving averages, indicating some issues for the British pound.

Note: The author considers the period and prices of moving averages on the hourly chart (H1) and differ from the general definition of classical daily moving averages on the daily chart (D1).

Bollinger Bands

In case of a decline, the lower boundary of the indicator will act as support around 1.2580.

Description of Indicators: