FX.co ★ GBP/USD: trading plan for the US session on December 14th (analysis of morning deals). The pound continues to grow counting on the Bank of England

In my morning forecast, I highlighted the level of 1.2620 and recommended making trading decisions based on it. Let's take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.2620 led to an excellent entry point for long positions, resulting in an upward movement of more than 30 points. Breaking through and retesting 1.2648 gave another buying signal, allowing it to pull out about 20 more points from the market. The technical picture for the second half of the day was slightly revised.

To open long positions on GBP/USD, the following is required:

Considering that we have an important Bank of England meeting ahead, which I discussed in detail in my morning forecast, there is no need to repeat. How to act and what to expect, I explained in detail there. In this forecast, let's pay attention to the American reports on changes in retail trade volume in the United States and the number of initial claims for unemployment benefits. If retail sales disappoint, the pound will continue its active growth, which I suggest taking advantage of. If sales increase sharply, then the pressure on the pair will return. In this case, the most optimal scenario will be to defend the nearest support at 1.2648, the test of which may occur during the publication of the Bank of England's decision. A false breakout there will provide an entry point for long positions with the aim of further growth of GBP/USD and updating a new weekly maximum of 1.2628. Breaking through and consolidating above this range can be expected only with a very tough regulator position, which will lead to the removal of stop orders and a more rapid rise of the pound to around 1.2722. The ultimate target will be the area of 1.2761, where I will take profit. Testing this level will indicate the formation of a new upward trend. In the scenario of the pair's decline and the absence of bullish activity at 1.2648 in the second half of the day, all hopes will shift to the larger support at 1.2620. Only a false breakout there will signal the opening of long positions. I plan to buy GBP/USD immediately on the rebound only from 1.2592 to correct within the day by 30-35 points.

To open short positions on GBP/USD, the following is required:

Sellers tried, but nothing worked. There were not many willing to sell in such a bullish market. If the rhetoric of the Bank of England is quite soft, I expect bears to show up only around 1.2628. Only the formation of a false breakout there will allow getting a sell signal and a chance for a downward movement toward the support at 1.2648, formed at the end of the first half of the day. Breaking through and retesting this range from bottom to top will deal a more serious blow to the positions of bulls, leading to the removal of stop orders and opening the way to 1.2620, from where the pound has already recovered once today. A more distant target will be the area of 1.2592, where I will take profit. In the scenario of the GBP/USD rise and the absence of activity at 1.2682 in the second half of the day, I will postpone selling until a false breakout at the level of 1.2722. However, it is crucial how the Bank of England's statement will be received. If there is no downward movement there, I will sell GBP/USD immediately on the rebound from 1.2761, but only counting on a pair correction down by 30-35 points within the day.

In the COT report (Commitment of Traders) for December 5, there was a sharp increase in long positions and a reduction in short positions. Demand for the pound persists, as recent statements by Bank of England Governor Andrew Bailey and other Bank of England officials that if the regulator does not continue to raise interest rates, it will at least maintain them at current highs, allowing buying the pair with each good downward movement. Ahead are the meetings of the Federal Reserve and the Bank of England, which will be decisive. The soft tone of American politicians will weaken the dollar's position. If the situation is the opposite, with the Fed stating that we need to wait longer for a decrease and the Bank of England expressing concern about the prospects for economic growth, a fall in the pound is inevitable. In the last COT report, it is mentioned that long non-commercial positions increased by 5,063 to the level of 66,359, while short non-commercial positions fell by 14,497 to the level of 54,694. As a result, the spread between long and short positions increased by 3,025.

Indicator signals:

Moving Averages

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

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 classical daily moving averages on the daily chart D1.

Bollinger Bands

In case of a decline, the lower boundary of the indicator will act as support in the area of 1.2535.

Indicator Descriptions:

• Moving Average (MA): Determines the current trend by smoothing volatility and noise. Period 50 is marked in yellow on the chart. Period 30 is marked in green on the chart.
• Moving Average Convergence/Divergence (MACD): 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 use the futures market for speculative purposes and meet certain requirements.
• Long Non-commercial Positions: The total long open position of non-commercial traders.
• Short Non-commercial Positions: The total short open position of non-commercial traders.
• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.