FX.co ★ GBP/USD: the plan for the American session on October 10 (analysis of morning deals). The pound updated the weekly low, but then returned to the side channel

In my morning forecast, I paid attention to the levels of 1.1108 and 1.1029 and recommended making decisions on entering the market there. Let's look at the 5-minute chart and figure out what happened. An unsuccessful attempt by the pound buyers to get above 1.1108 led to a false breakdown and a sell signal, as a result of which the pair collapsed to the area of 1.1029, allowing them to take more than 70 points of profit. However, the bulls did not sit on the sidelines and defend 1.1029, giving a false breakdown and a buy signal. At the time of writing, the pair had recovered by more than 70 points, and the demand for the pound remained. From a technical point of view, nothing has changed.

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

Given that the market's further reaction will be only to the speeches of representatives of the Federal Reserve System, I advise you to stick to the same plan as in the morning and make decisions from the same levels. In the case of a decline in the pair, the optimal scenario for buying remains the formation of a false breakdown in the support area of 1.1029, similar to what I discussed above. This will give another excellent entry point to return to the level of 1.1108, just above which the moving averages are passing, which now limits the further upward potential of the pair. Only after getting above this range will it be possible to talk about building an upward correction and the defeat of sellers. The target of the movement will be the 1.1167 area. But the resistance of 1.1222 will be much more interesting, the update of which will lead to a fairly large capitulation of sellers. I recommend fixing profits there. If the GBP/USD falls against the background of hawkish statements by representatives of the Federal Reserve System and the absence of buyers at 1.1029, which is more likely, the pressure on the pound will increase. In this case, I recommend postponing long positions to 1.0955. I advise you to buy there only on a false breakdown. It is possible to open long positions on GBP/USD immediately on a rebound from 1.0876, or around the minimum of 1.0800, with the aim of a correction of 30–35 points within a day.

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

The bears updated the weekly low but failed to stay there. There's nothing to worry about since the market is still on their side. Taking control of the 1.1029 level is now the most important task of sellers. A breakout and a reverse test from the bottom up of 1.1029 will return pressure on the pound and give a chance for a larger drop with a breakdown of the minimum of 1.0955. Going beyond this range will determine the entry point for sale with a fall to 1.0876, but a much more interesting target will be the 1.0800 area, where I recommend fixing the profits. But such a large movement will be possible only in the middle of the week when the US inflation report will be released. With the GBP/USD growth option, the bears will try to prove themselves in the nearest resistance area of 1.1108. By analogy with the morning entry point, a false breakout at this level will give another excellent sell signal. In the absence of major players, the situation will return to the control of buyers, which will lead to update 1.1167. Only a false breakout at this level forms an entry point into short positions in the expectation of a downward correction. In case of a lack of activity there, there may be a jerk up to 1.1222, where I advise selling GBP/USD immediately for a rebound, counting on the pair's rebound down by 30-35 points within a day.

The COT report (Commitment of Traders) for September 27 recorded a sharp increase in both long and short positions. The fact that the pound lost about 10.0% in two days, after which the Bank of England was simply forced to intervene in the situation, is directly related to the return of demand and the growth of long positions, which exceeded the growth of short ones. After the Bank of England raised interest rates by only 0.5%, the pound fell to historic lows against the US dollar, and many started talking about the fact that it was so close to parity. However, the regulator's intervention in the bond market helped stabilize the foreign exchange market situation, which allowed the bulls to compensate for a significant part of the positions. However, how long will such support from the Bank of England last to keep the British pound afloat during a further increase in interest rates? This week, data on activity in the UK is expected, which may significantly harm the pound and limit its upward potential. The latest COT report indicates that long non-commercial positions increased by 18,831 to 59,831. In contrast, short non-commercial positions jumped by 10,123 to the level of 106,255, which led to another small reduction in the negative value of the non-commercial net position to the level of -46,424 versus -54,843. The weekly closing price collapsed from 1.0738 to 1.1392.

Signals of indicators:

Moving Averages

Trading is conducted below the 30 and 50-day moving averages, which indicates an attempt to decrease the pound further.

Note: The author considers the period and prices of moving averages 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 case of growth, the upper limit of the indicator at around 1.1108 will act as resistance.

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 to 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.