FX.co ★ GBP/USD: trading plan for the US session on December 18th (analysis of morning deals). Pound buyers tried their best

In my morning forecast, I highlighted the level of 1.2687 and recommended making entry decisions based on it. Let's examine the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.2687 provided an excellent entry point for long positions; however, a more significant rise beyond 15 points did not materialize. The technical picture was revised for the second half of the day.

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

The absence of news from the UK and an unsuccessful attempt to consolidate around the daily high led to the pound's decline after several weak attempts to break 1.2687. For this reason, the technical picture had to be revised for the second half of the day. Given that there is no other statistical data aside from the NAHB Housing Market Index in the US, it is anticipated that the bulls will be able to protect the minimum of last Friday, where the current trading is occurring. A false breakout in that area would offer an entry point for long positions, aiming for the growth of GBP/USD and updating the daily high at 1.2699, just above which the moving averages favoring sellers are situated. A breakout and consolidation above this range can only be expected with very weak US data, triggering bear stop orders and a more pronounced pound rise to around 1.2726. The ultimate target would be the area of 1.2754, where I would make a profit. In the scenario of a further decline in the pair and the absence of bullish activity at 1.2665 in the second half of the day, pressure on the pair will only increase. Only a false breakout around the next support at 1.2637 would signal the opening of long positions. I plan to buy GBP/USD immediately on the rebound only from 1.2615—the last hope of buyers to maintain the trend and correct 30-35 points within the day.

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

Sellers regained market control and are now aiming for a local minimum. Of course, in the current conditions, it would be good to re-enter the market from 1.2699, where the formation of a false breakout would signal a sale to update the daily minimum of 1.2665. A breakout and a reverse test from the bottom to the top of this range against strong US statistics would also seriously blow bullish positions, triggering stop orders and opening the way to 1.2637 and then very close to 1.2615. The more distant target would be the area of 1.2592, where I would take a profit. In the case of GBP/USD rising and the absence of activity at 1.2699 in the second half of the day, the pair will remain in a sideways channel until the end. In this case, I will postpone selling until a false breakout at 1.2726. If there is no downward movement, I will sell GBP/USD immediately on the rebound from 1.2754, but I am only expecting a correction of the pair 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 decrease in shorts. The demand for the pound remains strong, given recent statements from Bank of England Governor Andrew Bailey and other policymakers. They suggest that if the regulator does not continue to raise interest rates, it will at least maintain them at current highs, encouraging the purchase of the pair with each favorable downward movement. Ahead are meetings of the Federal Reserve and the Bank of England, which will be decisive. A dovish tone from American policymakers will weaken the dollar.

If the situation is reversed, with the Fed stating the need to wait longer before decreasing rates and the Bank of England expressing concerns about economic growth prospects, a decline in the pound is inevitable. The latest COT report stated that non-commercial long positions increased by 5,063 to the level of 66,359, while non-commercial short positions decreased 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 carried out below the 30 and 50-day moving averages, indicating further pair declines.

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

Bollinger Bands

In case of a decline, the lower boundary of the indicator, around 1.2665, will act as support.

Description of Indicators:

• The moving Average (50) is marked in yellow on the chart.
• The moving Average (30) is marked in green on the chart.
• MACD Indicator (Fast EMA 12, Slow EMA 26, SMA 9)
• Bollinger Bands (Period 20)
• Non-commercial traders include speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes.
• Long non-commercial positions represent the total number of long open positions non-commercial traders hold.
• Short non-commercial positions represent the total number of short open positions that non-commercial traders hold.
• The total non-commercial net position differs from the short and long non-commercial positions.