FX.co ★ GBP/USD: plan for the US session on February 22 (analysis of morning trades)

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

The British pound drew a great buy signal in the first half of the day. Let's look at the 5-minute chart and talk about what happened. Even in my morning forecast, I paid attention to the level of 1.3983 and recommended opening long positions from it, provided that a false breakout is formed, which happened. It is clear to see how the bears are trying to break below 1.3983, however, nothing happens. Then, at the next attempt, sellers can't even reach the level of 1.3983, which forms an excellent entry point for those who decided to wait and did not have time to enter at the first signal. As a result, the movement was about 50 points. We fell just 5 points short of the target level of 1.4047.

In the second half of the day, the bulls will try to play out a scenario with a breakout and a consolidation above 1.4047. A test of this level from top to bottom will lead to the formation of a new signal to open long positions to update 1.4116, where I recommend fixing the profits. A further target will be a maximum of 1.4186. However, before buying the pound at 1.4047, pay attention to the divergence of the MACD indicator, which has been formed since February 18. In this case, growth above 1.4047 will be quite limited, and a break of 1.4047 may lead to a false breakout. In the event of another decline in the pound in the second half of the day, buyers will also focus on protecting the level of 1.3983. Therefore, you can open long positions from it by analogy with the morning purchase, which I analyzed a little higher. In the scenario of a lack of activity on the part of buyers in the area of 1.3983, and the growth should be quite sharp from this level, I recommend postponing long positions until the test of the minimum of 1.3927, from which you can buy the pound immediately on the rebound in the expectation of an upward correction of 25-30 points within the day. I also recommend buying GBP/USD immediately on a rebound from the minimum of 1.3884.

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

The initial task of the bears is to regain control of the support of 1.3983, which could not be done in the first half of the day due to the continuation of a strong bullish trend. A consolidation below the level of 1.3983 and a test of it on the reverse side forms a signal to open short positions to return to the area of 1.3927, where I recommend fixing the profits. A more distant target will be the area of 1.3884. In the scenario of GBP/USD growth in the second half of the day in the area of 1.4047, it is best not to rush to sell, and wait for the formation of a false breakout. The divergence on the MACD indicator will be an additional signal to sell the pound. It is possible to open short positions immediately on a rebound from the maximum of 1.4117 with the expectation of a downward correction of 25-30 points within the day.

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 above 30 and 50 daily averages, which indicates a continuation of the bull market in the short term.

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

A break of the upper limit of the indicator in the area of 1.4045 will lead to a new wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.3985 will increase the pressure on the pound.

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.