FX.co ★ GBP/USD: plan for the US session on June 4 (analysis of morning trades)

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

In my morning forecast, I paid attention to the resistance of 1.4115 and recommended making decisions from this level. Let's look at the 5-minute chart and talk about what happened there. It is clear to see how the bulls make their way above this area, and the bears do not even try to show activity there. As a result, there is a consolidation above this range. However, it was not possible to get a normal signal to open long positions against the trend – the test of the level of 1.4115 from top to bottom did not occur. Given that the movement is going against the downward trend and waiting for important data on the US labor market, it is better not to rush to make decisions before the reports are released.

Now the main task of buyers will be to protect the level of 1.4115, and only after the formation of a false breakdown there, which may be formed during the data on the US labor market, I recommend opening long positions in the continuation of the bullish correction to update the resistance of 1.4152. Going beyond this range will occur only in the case of very weak indicators for the unemployment rate. The test of 1.4152 from top to bottom forms an additional signal to buy the pound already to test the maximum of 1.4188, where I recommend fixing the profit. If the pressure on the pound returns in the afternoon, and the bears push the GBP/USD below the support of 1.4115 – in this case, it is better not to rush to buy. The optimal scenario will be long positions, provided that a false breakout is formed in the support area of 1.4077. You can buy the pound immediately for a rebound only from the next local low in the area of 1.4041 to rebound up by 20-25 points within the day.

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

The bears will wait for the reports and are unlikely to do anything at 1.4115 before they are published. The return of the pair under this range and its test from the bottom up is an excellent signal to open short positions in the continuation of the bearish trend that we have been observing since the middle of this week. The sellers' initial target will be the support of 1.4077. The breakout and its reverse test from the bottom up will form an additional signal to open short positions with the expectation of updating the lows in the area of 1.4077 and 1.4041, where I recommend taking the profits. If the pound's growth continues in the second half of the day, only the formation of a false breakout in the resistance area of 1.4152 will be a signal to open short positions on the pair. You can sell GBP/USD immediately on a rebound from the maximum of 1.4188 with the aim of a downward correction of 20-25 points within the day.

Let me remind you that the COT reports (Commitment of Traders) for May 25 recorded a reduction in short positions and a sharp increase in long ones. Recent statements by the Bank of England representatives that now is the time to think about curtailing support measures and raising interest rates surprised many traders. However, this returned the British pound's demand, which managed to pull up to annual highs. The pound was also supported by the news that from June 21 this year, the UK economy will be fully open, and all restrictive measures due to COVID will be canceled. It will be an excellent bullish boost for retail sales and inflation. Against this background, the upward potential of the pound will remain quite high. The COT report indicates that long non-profit positions increased from 63,027 to the level of 64,193.

In contrast, short non-profit positions sharply decreased from the level of 38,127 to the level of 33,534, which indicates profit-taking and the departure of sellers from the market after unsuccessful attempts to turn the market to their side. It is another plus in the piggy bank of buyers of the pound and those who believe in continuing the medium-term upward trend. As a result, the non-profit net position increased from 24,900 to 30,659. The closing price of last week did not change significantly and amounted to 1.41553 against 1.41479.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily averages, which prevent further growth of the pound within the day.

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 above 1.4130 will lead to a new pound growth. A break of the lower limit of the indicator in the area of 1.4077 will increase the pressure on the pair.

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.