FX.co ★ GBP/USD: plan for the US session on April 21 (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 1.3944 and recommended making a decision based on it. Let's look at the 5-minute chart and figure out the entry points. Nondescript fundamental statistics on the growth of inflation in the UK and a false breakdown of the level of 1.3944 - all this led to the formation of a good entry point into short positions. As a result, there was a downward movement to the target level of 1.3892, where I recommended taking the profits. The profit was about 50 points.

In the second half of the day, buyers need to focus on the support of 1.3892, since only the formation of a false breakdown there will lead to the formation of a signal to open long positions in the expectation of a resumption of the pound's growth. In this scenario, you can count on the recovery of GBP/USD to the morning highs of 1.3944, where I recommend taking the profits. There are no fundamental reasons that could lead to a break in the intraday downward trend of the pair today. Therefore, if there is no bull activity in the support area of 1.3892, it is best to postpone purchases until the test of a larger minimum of 1.3838, from which you can open long positions immediately for a rebound in the expectation of an upward correction of the pair of 25-30 points within the day.

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

The sellers achieved their goal and managed to defend the resistance of 1.3944, even if not so quickly, but eventually dumped GBP/USD in the support area of 1.3892. The main task of the bears for the second half of the day will be to return the pair to the level of 1.3892. Still, only a consolidation below and a test of this area from the bottom up will lead to forming a new signal to open short positions in the expectation of a decline in the pound to a large minimum of 1.3838, where I recommend fixing the profits. A breakout of this range will completely cancel out the bull market observed earlier this week. In the scenario of the pound's growth during the US session, it is best not to rush with sales: a resistance test of 1.3944 and another false breakout at this level will be good guidelines for sellers to open short positions. If there is no activity on the part of the bears, it is best to postpone short positions until the update of this month's maximum in the area of 1.4000, from where you can sell the pound immediately on the rebound in the expectation of a downward correction of 25-30 points within the day.

The COT reports (Commitment of Traders) for April 13 recorded an increase in both long and short positions, while the total non-commercial net position increased, which indicates a higher activity of buyers of the pound. The good fundamental data that has recently been released on the UK economy proves a fairly high probability of strong economic growth in the 2nd quarter of this year, which will continue to contribute to the growth of the British pound in the medium term. The Bank of England has long been talking about how to proceed with a stimulating monetary policy, since as the economy grows, there will be additional problems with inflation. The pound's rise earlier this week once again proves its appeal to the big players, and the bull market will only gain momentum by the summer of this year. The COT report shows that long non-profit positions rose from the level of 45,270 to the level of 52,851. At the same time, the short non-profit rose from the level of 25,219 to the level of 27,261, bringing the non-profit net position up to the level of 25,590 from the level of 19,951 a week earlier. The weekly closing price, on the contrary, fell to 1.3753 from 1.3913.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily averages, which indicates that the pressure on the pair remains.

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 1.3944 will lead to a larger increase in 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, 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.