In my morning forecast, I drew attention to the level of 1.2758 and planned to make decisions for market entry based on it. Let's look at the 5-minute chart and analyze what happened. The rise and formation of a false breakout allowed for a suitable selling signal for the pound, but at the time of writing the article, a significant sell-off had not yet occurred. The technical picture for the second half of the day was not reassessed.
To open long positions on GBP/USD, the following is required:
As long as trading remains below 1.2758, the chances of a decline in the pound are quite high. But much now depends not only on the ECB meeting but also on the US data. In the second half of the day, weekly figures on initial jobless claims in the US and the balance of trade will also be released. The speech by Federal Reserve Chair Jerome Powell in the Senate will no longer be as relevant since he will simply repeat everything he said yesterday in the House of Representatives. In the event of a decline in the pair, I prefer to act after a decline and the formation of a false breakout around the nearest support at 1.2723, which formed at the end of yesterday. This will provide a suitable entry point for long positions, expecting the continuation of the bullish trend with the prospect of updating to 1.2758 – a new resistance where buyers are likely to face serious challenges. Breaking and consolidating above this range will increase demand for the pound and open the way to 1.2797, strengthening the positions of bulls in the continuation of building a bullish trend. The ultimate target will be the maximum at 1.2823, where I plan to take a profit. In the scenario of a decline in the pair and the absence of activity from bulls at 1.2723 in the second half of the day, where moving averages are located, the pound may decline. In such a case, only a false breakout around the next support at 1.2691 will confirm the correct entry point for the market. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2666, with the target of a correction of 30-35 points within the day.
To open short positions on GBP/USD, the following is required:
The bears need to stay below 1.2758. Another false breakout at this level will be an excellent confirmation of the selling signal, leading to a downward movement with the target of correction around 1.2723 – support where moving averages play in favor of buyers. Breaking and reverse testing from bottom to top of this range will occur only in the case of very strong US statistics, which will deal another blow to the positions of bulls, leading to 1.2691, where I expect the manifestation of already large buyers. The ultimate target will be the area around 1.2666, where profit will be taken. In the case of an upward movement of GBP/USD and the absence of activity at 1.2758 in the second half of the day, which is likely to happen, buyers will once again feel the strength for further development of the upward trend. In such a case, I will postpone sales until there is a false breakout at the level of 1.2797. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.2823, but only with the expectation of a pair correction down by 30-35 points within the day.
Indicator signals:
Moving Averages:
Trading is conducted above the 30 and 50-day moving averages, indicating further growth of the pound.
Note: The period and prices of moving averages are considered by the author 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 around 1.2723 will act as support.
Description of indicators:
Moving Average (MA, determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow. Moving Average (MA, determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green. MACD Indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages). 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 certain requirements. Long non-commercial positions represent the total long open positions of non-commercial traders. Short non-commercial positions represent the total short open position of non-commercial traders. The total non-commercial net position is the difference between the short and long positions of non-commercial traders.