FX.co ★ GBP/USD: plan for the European session on November 10. COT reports. Pound is experiencing problems with further growth. UK may withdraw from Brexit agreement

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

There were several excellent signals to enter the market on Friday. Let's take a look at the 5-minute chart and figure out all the entry points. In my morning forecast, I paid attention to the 1.3596 level and advised you to make decisions on entering the market. As a result of the bulls' unsuccessful actions above 1.3596 and a false breakout, a signal to sell the pound was formed, the probability of which I spoke in detail about in the morning. Strong data on the US economy led to a strong sell-off in GBP/USD in the second half of the day and to a renewal of support at 1.3533, which made it possible to take about 60 points of profit from the market. Forming a false breakout at this level led to an excellent entry point into long positions in the opposite direction, making it possible to take about 30 more points from the market.

Today we also do not have important fundamental statistics for the UK, so the entire focus of traders will shift to the situation that is developing around the Brexit agreement. Apparently, the Brits are not going to comply with it any longer - this is a strong leading signal that could lead to another wave of a sharp fall in the pound. This news brought the pressure back to the pound yesterday, and now the bulls' main task is to protect the lower border of the horizontal channel at 1.3526, formed at the end of yesterday. Forming a false breakout there will return the chance for an upward correction of the pair, which will lead to a renewal of resistance at 1.3567, which is the middle of the channel. An equally important task is to regain control over this level. A breakthrough and reverse test from top to bottom of this range will provide a signal to buy the pound, which can push the pair to rise to the 1.3605 area and provide the prospect of reaching a high like 1.3649, where I recommend taking profits. The next target will be the high at 1.3694, which will be available only in case we receive weak data on the consumer price index in the US. In case the pair falls in the first half of the day and a deterioration in the situation around Brexit, the best option for buying the pound will be a test of the next support at 1.3478. However, I advise you to open long positions there only after a false breakout. You can observe long positions on GBP/USD immediately for a rebound from a new low like 1.3426, or even lower - from support at 1.3375, counting on a correction of 25-30 points within the day.

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

Yesterday, bears have already declared themselves, not making it possible to build an upward correction. All that they need now is a breakthrough and a reverse test of 1.3526 from the bottom up, which generates a signal to open new short positions with the goal of falling to lows: 1.3478 and 1.3426, where I recommend taking profits. The next target will be the 1.3375 level, but access to it will open amid very strong inflationary pressure in the US in October this year. The data will be published in the afternoon. If the pair grows during the European session, forming a false breakout in the area of the middle of the horizontal channel at 1.3567 will be the first signal to open short positions. If we see GBP/USD rise above this level, it is best to postpone selling until the larger resistance at 1.3605. I advise you to open short positions immediately on a rebound from 1.3649, or even higher - from a new high in the 1.3694 area, counting on the pair's rebound down by 20-25 points within the day.

I recommend for review:

The Commitment of Traders (COT) reports for November 2 revealed an increase in both short and long positions, reflecting the return of demand for the British pound ahead of the BoE meeting, which took place last week. Considering that there are more bulls and they continue to return to the market, we can count on the continued upward correction of the pair. Many BoE officials are speaking this week and are already starting to make converse statements disagreeing with BoE Governor Andrew Bailey's policies. Let me remind you that after the BoE's November meeting, monetary policy remained completely unchanged, although many traders were betting on tightening it by the end of the year. In this regard, sharp inflationary pressures will continue to support the demand for the British pound. Therefore, I recommend adhering to the strategy of buying the pair in case of very large falls, which will occur against the background of uncertainty in the policy of the central bank. The COT report indicated that long non-commercial positions rose from 51,912 to 57,255, while short non-commercials also strengthened slightly from 36,959 to 42,208. This led to an upward shift in the non-commercial net position. The delta was 15,047 against 14,953 a week earlier. The weekly closing price of GBP/USD dropped significantly as a result of the BoE's policy from 1.3763 to 1.3654.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates some market uncertainty with the further direction of the pair.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

A breakthrough of the upper border of the indicator in the area of 1.3575 will lead to a new wave of growth of the pound. A breakout of the lower border of the indicator in the area of 1.3535 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. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial 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 short and long positions of non-commercial traders.