FX.co ★ GBP/USD: plan for the US session on February 16 (analysis of morning trades)

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

In my morning forecast, I paid attention to the level of 1.3909 and recommended actions based on it. Let's look at the 5-minute chart and analyze the entry point. The optimal scenario for buying the pound was a downward correction to the area of 1.3909, which happened. The formation of a false breakout and a return to this range indicated the presence of a large buyer in the market, which did not allow the bears to retest the area of 1.3909 at the next attempt to break below this range. This scenario became an additional signal for building up long positions to form a new upward wave to the base of the 40th figure.

The fact that the buyers coped with their task and did not let the pair fall below 1.3909 does not mean that the market is under their full control. If we compare the charts, then from a technical point of view, nothing has changed compared to the morning forecast. The key task of the pound buyers for the second half of the day will be to break through and consolidate above the resistance of 1.3954, near which the entire Asian upward movement stopped today. A test of this level from top to bottom will form an additional signal to open long positions in the continuation of the upward trend, which will easily open a direct road to the area of the new annual maximum of 1.3993, where I recommend taking the profits. A more distant target will be the level of 1.4036, however, you can't do without a new batch of good fundamental statistics. In the case of a downward correction of GBP/USD today in the second half of the day against the background of the lack of important reports on the US economy, it is best not to rush to buy, but to wait for the formation of a false breakout in the support area of 1.3909 (as it was in the first half of the day). There are also moving averages playing on the side of the bulls. If there is no activity on the part of buyers, I recommend waiting for the test of the minimum of 1.3862 and buying the pound from there for a rebound with the aim of an upward correction of 20-30 points within the day. The lower limit of the current upward trend also passes there.

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

Now, only the formation of a false breakout in the area of 1.3954, which I did not wait for in the first half of the day, will return the pressure on the pair and lead to the formation of a small downward correction. An equally important task for the bears is to regain control over the support of 1.3909, which was not possible during the European session. Only a break and a test of this level from the bottom up will form an entry point into short positions to reduce the GBP/USD to the area of the minimum of 1.3862, where I recommend taking the profits. If the pair grows in the second half of the day and there is no activity from the bears in the resistance area of 1.3954, I recommend that you do not rush to sell, but wait for the update of the new annual high of 1.3993. You can open short positions from there immediately on a rebound with the aim of a downward correction of 30-35 points within the day. The next major resistance is seen only in the area of 1.4036.

Let me remind you that the COT reports (Commitment of Traders) for February 9 recorded a sharp increase in long non-commercial positions and a reduction in short ones. This led to a fairly large increase in the positive delta. The bulls are making their way to new highs taking advantage of the good news on vaccination in the UK. Last week's report on UK GDP led only to a larger build-up of long positions in the expectation of a strong economic recovery in early 2021. Long non-profit positions rose from the level of 53,658 to the level of 60,513. At the same time, the short non-profit declined from the level of 44,042 to the level of 39,395, which only strengthened the bullish sentiment. As a result, the non-profit net position rose to 21,118, up from 9,616 a week earlier. The weekly closing price was 1.3745 against 1.3675. The fact that the bulls held their positions on such high volatility within the week once again suggests that the pair is set to overcome the annual highs and quickly return to the area of the 40th figure. I recommend betting on further strengthening of the pound. As the quarantine measures are lifted, which are expected to be phased out in February this year, demand for the pound will only increase. In March, we expect news about the support of the population and the UK labor market, which also pushes the pound up now.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, which indicates the continued growth of the pound.

Note: The period and prices of the 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

Only a break of the upper limit of the indicator in the area of 1.3954 will lead to a new wave of growth of the pound. In case of a decline, the pair will be supported by the lower limit of the indicator in the area of 1.3895.

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.