In my morning forecast, I focused on the level of 1.2567 and planned to make entry decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The decline and formation of a false breakout around 1.2567 in the first half of the day allowed for an entry point for buying the pound, but as you can see on the chart, significant growth did not occur. After a 20-point upward surge, pressure on the pair returned. For this reason, the technical picture was completely reassessed for the second half of the day.
For opening long positions on GBP/USD, the following is required:
The absence of UK statistics prevented pound bulls from continuing the uptrend. Now, everyone will focus on US data and the speeches of American politicians, which could lead to another upward surge in GBP/USD. Before entering the market, it's best to wait for the release of reports on changes in US employment from ADP and the ISM Non-Manufacturing PMI. A strong labor market will benefit the dollar, as will a strong services sector. Also, we should remember the speeches of another series of FOMC representatives, as well as Federal Reserve Chairman Jerome Powell, who clearly indicated at the last meeting his intention to cut rates this summer. What he says now, when US deflation has stalled and has not shown positive changes for the third consecutive month, will be crucial. In the event of a pair decline, I plan to look for long positions only after the formation of a false breakout around the new support level of 1.2538, formed at the end of this week. This will provide a chance for a demand return with the prospect of updating 1.2591—a new resistance level. Breaking and consolidating above this range will strengthen the bullish positions and open the way to 1.2639. The ultimate target will be a maximum of 1.2672, where I intend to make a profit. In the scenario of a GBP/USD decline and the absence of activity from bulls at 1.2538 in the second half of the day, the pair will return to a decline, allowing sellers to strengthen the downtrend. In this case, only a false breakout around the next support at 1.2507 will confirm the correct entry point into the market. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2482, with a target of a 30-35 point correction within the day.
For opening short positions on GBP/USD, the following is required:
The bears also have a chance to build the trend further, but good US statistics and Powell's uncertain position are needed for this. Today, I plan to act after the protection of the resistance at 1.2591, where the moving averages, playing on the sellers' side, are slightly below. A false breakout will confirm the correct entry point for selling in the development of the bearish market, leading to a downward movement towards 1.2538. Breaking and reverse testing from the bottom to the top of this range will deal another blow to bullish positions, leading to stop order triggering and opening the way to 1.2507. There, I expect the appearance of major buyers. The ultimate target will be the area of 1.2482, where profit will be taken. In the scenario of GBP/USD growth and the absence of activity at 1.2591 in the second half of the day, as well as soft statements from Federal Reserve System representatives regarding future interest rates, buyers will feel strong again. In this case, I will postpone sales until a false breakout at the level of 1.2639. If there is no downward movement there, I will sell GBP/USD immediately on a rebound from 1.2672, but only in anticipation of 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 further pair decline.
Note: The author considers the period and prices of moving averages on the hourly chart (H1) and differs 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 1.2575, will act as support.
Indicator Description
• Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.
• Moving Average (determines the current trend by smoothing volatility and noise). 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. 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 position 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 short and long positions of non-commercial traders.