FX.co ★ GBP/USD: plan for the US session on March 11 (analysis of morning trades)

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

In my morning forecast, I advised you to pay attention to the level of 1.3919 and make decisions on entering the market from it. Let's look at the 5-minute chart and analyze the entry points. In the absence of important fundamental statistics, the test of the level of 1.3919 did not occur: accordingly, no signals were formed to enter the market. The sawtooth movement forces many to sit on the sidelines, as there are no benchmarks and the market volatility is quite low. The strength of the dollar has dried up, and few people want to rush to buy the British pound yet. The focus will shift to the second half of the day: the decision of the European Central Bank is unlikely to affect the pound much, however, the data on the US labor market may lead to a surge in volatility, especially if US bond yields continue to decline.

The technical picture has not changed much, as we did not reach the levels indicated in the morning. In this regard, I revised the nearest support and resistance. In the case of a decline in the pound in the second half of the day, only the formation of a false breakout in the support area of 1.3928 forms the entry point to long positions in order to continue the upward correction of the pair. There are also moving averages that play on the side of buyers of the pound. The nearest target of the bulls remains the resistance of 1.3995, where I recommend taking the profit. Its breakout will completely cancel out the bear market and lead to the formation of a new upward trend with the prospect of entering the area of 1.4062. In the scenario of a decline in the pound in the second half of the day and a lack of activity in the area of 1.3928, it is best not to rush to buy: the optimal scenario under this condition will be buying GBP/USD immediately rebound from the large support of 1.3857 in the expectation of an upward correction of 25-30 points within the day.

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

The initial task of the bears is to regain control of the missed level of 1.3928, which they did not even manage to reach in the first half of the day. Only a break with a test of the level of 1.3928 from the bottom up will return new sellers to the market, hoping for a resumption of the decline in GBP/USD, and a breakdown of the moving averages will lead to a larger sale of the pound with a return to the minimum of 1.3857. An equally important goal will be a breakout and a test of this level from the bottom up, which will form an additional entry point into short positions with the goal of returning to the support of 1.3783, where I recommend taking the profits. In the case of further growth of the pound in the second half of the day, it is best not to rush to sell: you can open short positions immediately on a rebound only from the maximum of 1.3995, counting on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.4062.

Let me remind you that the COT reports (Commitment of Traders) for March 2 recorded a reduction in both short and long commercial positions. The closing of short positions turned out to be stronger, which led to an increase in the positive delta. And although the rise in US bond yields is providing serious support to the US dollar at the moment, in the medium term, buyers of the pound can only take advantage of the moment of correction of the pair to enter the market at more attractive prices. The expectation of curtailment of quarantine measures in March this year will support the pound, as will new measures to help the UK population fight the coronavirus pandemic, which was recently announced by Finance Minister Rishi Sunak. Long non-profit positions declined from the level of 68,266 to the level of 65,138. At the same time, short non-profit positions declined from the level of 37,288 to the level of 29,056, which maintains good prospects for the continued growth of the pound. As a result, the non-profit net position rose to 36,082 from 30,978 a week earlier. The weekly closing price was 13928 against 1.4067. The observed downward correction in the pound will attract new buyers.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, which indicates that the pound will continue to grow 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

In the event of a decline in the pound, the lower limit of the indicator in the area of 1.3905 will act as support.

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.