FX.co ★ GBP/USD: plan for the US session on April 29 (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 1.3970 and recommended making a decision based on it. Let's look at the 5-minute chart and see what happened: after another unsuccessful attempt to break above the resistance of 1.3970, the bears returned to the market, attempting to dump the pound in the support area of 1.3917, which we did not reach. However, I had to skip the sale from the level of 1.3970, as the signal did not fit my conditions: the formation of a false breakout and a return to the level of 1.3970. Since we did not reach the resistance of 1.3970, I did not open short positions from this level.

I did not revise the technical picture for the second half of the day, as I believe the current levels are fair for this market. In the second half of the day, buyers of the pound need to prevent a breakout of the range of 1.3917, where the formation of a false breakout will be a signal to open new long positions in the expectation of continuing the upward trend in April. This scenario may be realized after today's data on the GDP of the United States of America, the release of which is scheduled for the second half of the day. A good report can bring back demand for the British pound. An equally important task for the bulls will be to break through the level of 1.3970, which limited the growth of GBP/USD today during the European session. Only fixing on it with a reverse test from top to bottom will lead to the formation of another entry point into long positions in the expectation of an exit to the resistance of 1.4016, where I recommend fixing the profits. It is unlikely to count on a more active growth of the pound above the level of 1.4016 today. In the case of a decline in the pound and a lack of activity in the support area of 1.3917: I recommend postponing long positions immediately for a rebound from the local minimum in the area of 1.3863, from where you can count on an upward correction of 25-30 points within the day.

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

Sellers of the pound showed activity. However, it did not reach the designated goals. The strategy for the second half of the day remained the same: the bears need to regain the support of 1.3917, as only such a scenario will interrupt the bullish momentum and return the pair to the side channel in which it has been all this week. In the area of 1.3917, there are moving averages that play on the side of buyers, so a break of this range and a test of it from the bottom up on the volume forms a good signal to open short positions in GBP/USD with the main goal of falling the pair to the support area of 1.3863, for which a fierce struggle will begin again. A break in this range will allow the bears to take the market under their control, which will push GBP/USD to the minimum of 1.3811, where I recommend taking the profits. If the GBP/USD rises after the report on the US economy, the bears will have to defend the resistance of 1.3970. The formation of a false breakout will lead to the formation of a good entry point into short positions to reduce to the support of 1.3917. If there is no activity on the part of the bears in the area of 1.3970: the optimal scenario is to sell immediately on a rebound from a new local high in the area of 1.4016, based on a downward correction of 25-30 points within the day.

Let me remind you that the COT reports (Commitment of Traders) for April 20 recorded an increase in both long and short positions. The total non-commercial net position almost did not change, only slightly decreasing from the previous value. The growth of positions indicates a return to the market of players who expect further growth of the pound. However, such high prices are very attractive for sellers, so there is a sharp increase in short positions. The good fundamental data released last week on the UK economy proves a fairly high probability of strong economic growth in the 2nd quarter of this year. It will continue to contribute to the growth of the British pound in the medium term, so I recommend betting on its further strengthening against the US dollar. It is important how the market will react to the fundamental reports on the US economy this week and the Federal Reserve's decision on interest rates – this will be the main reason for the further movement of the pound and the downward trend correction of the pair. The COT report shows that long non-profit positions rose from 52,851 to the level of 61,053. At the same time, the short non-profit rose from the level of 27,261 to the level of 35,875, as a result of which the non-profit net position only slightly decreased to 25,178, against the level of 25,590 a week earlier. But the closing price, on the contrary, jumped to 1.3991 against 1.3753 last week, which indicates the upward potential of the pair.

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

A break of the upper limit of the indicator in the area of 1.3975 will lead to a new wave of growth of 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.