In my morning forecast, I paid attention to the 1.2468 level and planned to make decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. The decline and the formation of a false breakdown there led to an excellent entry point for the purchase of the pound, which resulted in an increase in the pair by almost 30 points. Unfortunately, we did not reach the target level of 1.2504. In the afternoon, the technical picture was not revised.
To open long positions on GBP/USD, you need:
There is no point in revising the next levels before the meeting of the Bank of England, since the market reaction and decisions of politicians cannot be predicted. It is best to wait for the development of the movement and act towards it on rollbacks. As for my expectations, I am betting on the failure of the pound and its rapid redemption with the subsequent implementation of purchase scenarios, which I will focus on. I will consider purchases in the area of all support 1.2468, formed based on the results of yesterday. I'm going to act there only after forming a false breakdown, similar to what I discussed above, which will give an entry point into long positions that can push the pound into the area of 1.2504, where the moving averages playing on the sellers' side are. A breakthrough and a top-down test of this range against the background of the reaction to the statements of the governor of the Bank of England is a chance for GBP/USD growth with the 1.2535 update. In the case of an exit above this range, we can talk about a breakthrough to 1.2569, where I'm going to fix profits. In the scenario of GBP/USD falling and no buyers at 1.2468 in the afternoon, the pressure on the pound will only increase, which will lead to the formation of a new bear market. In this case, I will look for purchases in the area of 1.2427. The formation of a false breakdown there will be a suitable option for entering the market. It is possible to open long positions on GBP/USD immediately on a rebound from 1.2383 in order to correct 30-35 points within a day.
To open short positions on GBP/USD, you need:
If we put aside the meeting of the Bank of England, the US data is unlikely to be able to influence the market direction. Weekly figures on the number of initial applications for unemployment benefits and the number of repeated applications for unemployment benefits in the United States do not matter much. The protection and formation of a false breakdown in the resistance area of 1.2504, formed following the results of yesterday, will make sure of the presence of sellers, which will lead to a fall in GBP/USD to the area of 1.2468. Bulls may not be able to withstand another blow to this level, so a breakout and a reverse test from the bottom up of this range will increase pressure on the pair, giving the bears an advantage and another entry point to sell with the aim of updating 1.2427. A test of this level will put buyers in a very dangerous position. A longer-range target will be a minimum of 1.2383, where I will record profits. With the option of GBP/USD growth and the absence of bears at 1.2504 in the afternoon, and this is possible against the background of maintaining the tough position of the Bank of England, the bulls will have the opportunity for a larger correction and an update of the 1.2535 level. I will also serve there only on a false breakdown. In the absence of activity there, I advise you to open short positions on GBP/USD from 1.2569, counting on the pair's rebound down by 30-35 points within the day.
In the COT report (Commitment of Traders) for April 30, there was a sharp reduction in long and short positions. The labor market report has not yet been taken into account in these indicators, so objectively we have incomplete data. But we have a meeting of the Bank of England ahead, at which the position of the regulator may affect the balance of power in the market. For this reason, the small outflow and reduction of positions of buyers and sellers is not surprising. The fact that there are one and a half times more short positions in itself indicates a medium-term trend, which I will continue to adhere to. The latest COT report says that long non-profit positions decreased by 4,791 to 43,668, while short non-profit positions fell by 2,034 to 72,658. As a result, the spread between long and short positions decreased by 550.
Indicator signals:
Moving Averages
Trading is conducted below the 30 and 50-day moving averages, indicating a further decline in the pound.
Note: The author considers the period and prices of moving averages on the hourly chart (H1), and this differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands
In case of decline, the lower boundary of the indicator, around 1.2468, will act as support.
Description of Indicators:
Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.MACD indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9Bollinger Bands. Period 20Non-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 positions of non-commercial traders.The total non-commercial net position is the difference between the short and long positions of non-commercial traders.