FX.co ★ GBP/USD: trading plan for the US session on July 14th (analysis of morning deals). The pound was stopped at 1.3137

In my morning forecast, I drew attention to the level of 1.3137 and recommended making decisions to enter the market from it. Let's look at the 5-minute chart and figure out what happened there. The growth and formation of a false breakout at 1.3137 provided an excellent entry point for short positions, leading to a fall of the pair by more than 30 points. As long as the trade is conducted below this range, you can bet on a larger drop in GBP/USD.

To open long positions on GBP/USD:

We are awaiting data on the consumer sentiment index and inflation expectations from the University of Michigan. Strong indicators can lead to a larger downward correction of the pound. The import price index report in the US is unlikely to be of any interest to traders. Considering the problems buyers face at annual highs, I will take my time to open long positions.

Only after a decrease and the formation of a false breakout in the area of the new support at 1.3081 do I expect to get a signal to buy the pound in continuation of the trend development with the target of moving around 1.3137, which we failed to surpass today. A breakthrough and consolidation above this range will form an additional signal to buy with movement at 1.3195. The ultimate target will be the 1.3253 area, where I will fix the profit. In the scenario of the GBP/USD falling during the American session due to the expected downward correction and the lack of buyers at 1.3081, pressure on the pound will increase. In such a case, only the defense of the next area of 1.3032 and a false breakout there will signal to open long positions. I plan to buy GBP/USD right on the rebound only from 1.2986 with the aim of correction by 30-35 points within the day.

To open short positions on GBP/USD:

Sellers only show activity in annual highs, which I advise you to take advantage of. As long as the trade is conducted below 1.3137, you can bet on a further fall of the pair, and another formation of a false breakout at 1.3137 will be excellent confirmation of the presence of large players in the market. A sell signal from this level will lead to a decline and update of the daily minimum around 1.3081, where the moving averages pass, playing on the bulls' side. A breakthrough and reverse test from the bottom to the top of this range will strike a more serious blow to the buyers' positions, pushing GBP/USD to 1.3032. The farthest target remains the minimum of 1.2986, where I will fix the profit.

In the case of further growth of GBP/USD and lack of activity at 1.3137 in the second half of the day, the development of the bull market will continue. In this case, I will postpone selling until the resistance test at 1.3195. A false breakout there will provide an entry point for short positions. If there is no downward movement there either, I will sell the pound right on the rebound immediately from 1.3253, but only in the calculation for a correction of the pair down by 30-35 points within the day.

The Commitment of Traders (COT) report for July 3 showed a short and long position reduction. Pound buyers have a chance to continue acting more aggressively, as the Bank of England, despite all the pressure and economic problems, will continue to adhere to high-interest rate policies due to serious inflation problems affecting household living standards. As for the Federal Reserve System, whatever politicians say, traders are beginning to reconsider their attitude towards the dollar, betting on its weakening in the medium term. This is due to the interest rates in the US, which are about to reach their peak levels. The optimal strategy remains to buy the pound on the decline. The latest COT report says that short non-commercial positions decreased by 6,192 to 46,196, while long non-commercial positions decreased by 7,921 to 96,461. This led to a slight decrease in the net non-commercial position to 50,265 from 51,994 a week earlier. The weekly price decreased and amounted to 1.2698 against 1.2735.

Indicator signals:

Moving averages

Trading is conducted above the 30 and 50-day moving averages, which indicates further pair growth.

Note: The author considers the moving average period and prices on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.

Bollinger Bands

In the event of a decline, the lower boundary of the indicator at around 1.3105 will act as support.

Indicator descriptions:

• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.

• Moving average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.

• MACD indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period 26. SMA period 9

• Bollinger Bands. Period 20

• Non-commercial traders - speculators, 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 open long position of non-commercial traders.

• Short non-commercial positions represent the total open short position of non-commercial traders.

• The total non-commercial net position is the difference between non-commercial traders' short and long positions.