FX.co ★ GBP/USD: trading plan for the US session on January 9th (analysis of morning deals). The pound returns to decline

In my morning forecast, I pointed out the level of 1.2718 and planned to make trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The decline did occur, but at the time of writing this article, a false breakout had not yet formed. Considering that we had already come very close to this level in the first half of the day, the technical picture was slightly reconsidered for the American session.

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

In the second half of the day, we have speeches by representatives of the Federal Reserve, and the further direction of the pair depends on their tone, which is likely to remain dovish. In addition, there are data on the NFIB Small Business Optimism Index and the trade balance. I prefer to act on buying only after a decline and the formation of a false breakout in the area of the new support level at 1.2704, where the pair is currently heading. This will provide a suitable entry point for long positions, from where we can reach 1.2735, an intraday resistance formed during the first half of the day. This level also coincides with the moving averages. A breakout and consolidation above this level will strengthen demand for the pound and open the way to 1.2767, where I expect more active selling activity similar to yesterday. The ultimate target will be the 1.2798 area, where I plan to make a profit. Things will not look good for buyers in the scenario of GBP/USD decline and the absence of bullish activity at 1.2704 in the second half of the day. In that case, I will postpone purchases to the next support level at 1.2674, the bull's last hope. I plan to buy GBP/USD immediately on a rebound only from 1.2642 with a 30-35 point intraday correction target.

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

Sellers continue to exert active pressure on the pair, confirming the lack of real buyers for the pound and demonstrating typical market manipulations without statistics. In the second half of the day, sellers need to think about how to protect the resistance at 1.2735 in case of an increase in the pair. Forming a false breakout there will provide a suitable entry point for short positions with the prospect of a decline to the support area at 1.2704. A breakthrough and a reverse test from the bottom to the top of this range can only occur in the case of very hawkish comments, which will deal a more serious blow to the bullish positions, opening the path to 1.2674. The ultimate target will be the 1.2642 area, where I plan to make a profit. Buyers will regain initiative in the scenario of GBP/USD rising and the absence of activity at 1.2735. In such a case, I will postpone selling until a false breakout at the 1.2767 level. If there is no downward movement, I will sell GBP/USD immediately on the rebound only from 1.2798, but with the expectation of a 30-35 point intraday correction.

In the COT report (Commitment of Traders) as of January 2nd, there was an increase in both long and short positions. There is still demand for the pound, as the recent decision by the Bank of England to leave interest rates unchanged, counting on further combatting high inflation, as well as statements by Bank of England Governor Andrew Bailey that rates will remain high for an extended period, all go against the expected policy of the US Federal Reserve, which plans to lower interest rates, noting good progress in fighting inflation. This leads to a weakening of the Dollar against the British Pound in the medium term. If new data on US price growth is expected soon, we can expect another rise in GBP/USD. In the latest COT report, it is stated that long non-commercial positions increased by 3,044 to the level of 61,794, while short non-commercial positions increased by only 1,931 to the level of 46,589. As a result, the spread between long and short positions increased by 38.

Indicator Signals:

Moving Averages

Trading is conducted around the 30 and 50-day moving averages, indicating a sideways market.

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

Bollinger Bands

In case of a decrease, the lower boundary of the indicator at 1.2725 will act as support.

Indicator Descriptions:

• Moving Average (an indicator that determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving Average (an indicator that determines the current trend by smoothing out 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 (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 represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open positions of non-commercial traders.
• The total non-commercial net position is the difference between short and long non-commercial positions.