In my morning forecast, I highlighted the level of 1.2616 and planned to make trading decisions based on it. Let's look at the 5-minute chart and analyze what happened. The breakthrough of 1.2616 occurred, but I didn't wait for a bottom-up retest, so suitable entry points into the market could not be obtained. The technical picture was revised for the second half of the day.
To open long positions on GBP/USD, the following is required:
Considering how quickly the bears played back all the growth from yesterday, apparently realizing that the statements of the Bank of England Governor did not bode well for the British pound, the pressure on the pair will likely persist in the second half of the day. In the second half of the day, in addition to the speeches of FOMC members Raphael Bostic and Michelle Bowman, we also expect the publication of the FOMC meeting minutes. If there is something new in the minutes, it is unlikely to be related to a tough committee stance. For this reason, the pound has every chance of a recovery. I plan to look for entry points into long positions only on a decline around 1.2604 – a new support formed at the end of today, where slightly above the moving averages pass, playing on the side of the bulls. Only a false breakout there with soft statements from FOMC representatives will provide a suitable entry point for buying, counting on a pair's recovery towards 1.2634 – also a new resistance. A breakthrough and consolidation above this range will strengthen demand for the pound and open the way to 1.2665, which will be a strong correction for the pound. The ultimate target will be around 1.2730, where I plan to make a profit. In the scenario of the pair's decline and the lack of activity from the bulls at 1.2604 in the second half of the day, the pound may face another sell-off, which will return to the bearish market. In this case, only a false breakout around the next support at 1.2581 will confirm the correct entry point. I plan to buy GBP/USD on a bounce from the minimum of 1.2559 with a target for a 30-35 point correction within the day.
To open short positions on GBP/USD, the following is required:
In the case of a small upward correction in the second half of the day, I plan to act only after the formation of a false breakout around the new resistance at 1.2634, which will allow me to make sure of the presence of large players in the market and will lead to the opening of my short positions with the target of another decline to around 1.2604. The breakthrough of this level is very important, and if it occurs during the speeches of American politicians, a bottom-up retest of this range will confirm the correct entry for selling the pound, leading to the removal of stop orders and opening the way to 1.2581. The ultimate target will be the area around 1.2559, where profits will be taken. In the case of an increase in GBP/USD and the absence of activity at 1.2634 in the second half of the day, buyers will try to regain control of the market. In this case, I will postpone sales until a false breakout at the level of 1.2665. If there is no downward movement there, I will sell GBP/USD immediately on the rebound from 1.2690, but only counting on a pair correction down by 30-35 points within the day.
In the COT report (Commitment of Traders) for February 13, there was an increase in long positions and a decrease in short ones, indicating the preservation of market balance after a series of fundamental data indicating the difficulties that the Bank of England will have to deal with. We are talking about high inflation and a weak economy in the UK, which is on the verge of a recession. A lot now depends on the further position of the Bank of England representatives, so pay special attention to their statements. The latest COT report states that non-commercial long positions increased by 6,609 to 90,545, while non-commercial short positions decreased by 9,388 to 40,073. As a result, the spread between long and short positions increased by 889.Indicator signals:
Moving averages
Trading is carried out above the 30 and 50-day moving averages, indicating an attempt to increase the pound.
Bollinger Bands
In case of a decline, the lower boundary of the indicator will act as support around 1.2604.
Description of Indicators
Moving Average (50): Averages out volatility and noise to determine the current trend. Period: 50. Marked on the chart in yellow.Moving Average (30): Averages out volatility and noise to determine the current trend. Period: 30. Marked on the chart in green.MACD Indicator (Moving Average Convergence/Divergence): Fast EMA period 12. Slow EMA period 26. SMA period 9.Bollinger Bands: Bands with a period of 20.Non-commercial Traders - Speculators: Includes individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.Long Non-commercial Positions: Represents the total long open positions of non-commercial traders.Short Non-commercial Positions: Represents the total short open positions of non-commercial traders.Total Non-commercial Net Position: The difference between short and long positions of non-commercial traders.