FX.co ★ GBP/USD: plan for the American session on January 12 (analysis of morning deals)

To open long positions on GBP/USD, you need to:

In my morning forecast, I recommended opening long positions after the bulls returned control over the level of 1.3531, which happened. Let's take a look at the 5-minute chart and talk about where it was possible to enter the market. The chart clearly shows how the bulls achieve a breakout of 1.3531 and gain a foothold in this range. Each attempt of the bears to return to the area of 1.3531 was unsuccessful, however, the pair turned slightly higher, in the area of 1.3536. To be fair, those who missed this trade did the right thing, as there was no real top-down test of the level of 1.3531. The growth of the pound, as expected, was stopped in the area of 1.3594, where now the bears will try to catch on to this level, forming a sell signal. More on this below.

Buyers of the pound now need to focus on the breakdown and consolidation above 1.3594. A test of this level from top to bottom, similar to the morning purchase, which I analyzed just above, will lead to the formation of another excellent entry point into long positions. At the same time, the target of the bulls will be the upper limit of the wide side channel 1.3661, where I recommend fixing the profits. It is worth paying special attention that a break and consolidation above 1.3594 will lead to a reversal of the downward trend that we have seen since January 4 this year. This will be a strong bullish signal, which will soon open a direct road to the maximum of 1.3701. If the bears are stronger and manage to regain control of the pound in the second half of the day, then you can consider new purchases after the formation of a false breakout in the support area of 1.3531. I recommend opening long positions immediately for a rebound from the low of 1.3452, based on an upward correction of 30-40 points within the day.

To open short positions on GBP/USD, you need to:

On the chart, a false breakout is still being formed in the resistance area of 1.3594, and the further direction of the pair will depend on whether the bears will hold this area, which is now being tested from the bottom up. So far, a sell signal for the pound has been formed, which can lead to a reversal of the intraday direction and push GBP/USD back to the support of 1.3531, where I recommend taking the profits. Only a consolidation below 1.3531 will indicate the continuation of the bear market observed since the beginning of this year. The target will be a minimum of 1.3452. If the bulls are stronger and break above 1.3594, in this case, we can expect the continuation of a large increase in GBP/USD to the resistance area of 1.3661, from where I recommend opening short positions immediately for a rebound in the expectation of a downward correction of 30-40 points within the day.

Let me remind you that COT reports (Commitment of Traders) for January 5 recorded a slight decrease in interest in the British pound, however, this does not affect the overall picture. Long non-commercial positions decreased from 37,550 to 35,526. At the same time, short non-commercial positions remained practically unchanged and increased only from 31,518 to 31,861. As a result, the non-commercial net position, although it decreased, remained positive and amounted to 3,665 against 6,032 a week earlier. All this suggests that traders continue to bet on the strengthening of the pound even in the face of a new strain of COVID-19, for which there is no vaccine yet. The demand for the pound is limited by quarantine measures in the UK, which will be canceled sooner or later after the situation with infections has stabilized. Additional stimulus by the Bank of England, which will soon be discussed by economists, may also somewhat smooth the upward trend in the pound.

Signals of indicators:

Moving averages

Trading is above 30 and 50 daily averages, which indicates a possible continuation of the pound's growth.

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 the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.3594 will lead to a new wave of growth of the pound. In the event of a decline in the pair, support will be provided by the average border of the indicator in the area of 1.3535.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet 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.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.