FX.co ★ GBP/USD: Trading Plan for the U.S. Session on August 28 (Analysis of Morning Trades). Pound Quickly Recovered

In my morning forecast, I focused on the 1.3219 level and planned to make market entry decisions based on it. Let's look at the 5-minute chart and analyze what happened. The decline and the formation of a false breakout at that level led to an entry point for buying the pound, contributing to the further development of the trend, resulting in the pair rising by more than 30 points. However, after a while, pressure on the pair returned. The technical picture for the second half of the day has not been revised.

To open long positions on GBP/USD:

Given that we have already moved below 1.3219 and there are no upcoming US statistics that could put pressure on the dollar, it is quite possible that the pound will continue its correction. Therefore, it is necessary to act very cautiously when increasing long positions. Only the formation of a false breakout around the support level at 1.3179, where the pair is currently heading, will provide a point to enter long positions in anticipation of a retest of the 1.3219 resistance, which acted as support earlier this morning. A breakout and subsequent retest of this range from top to bottom will strengthen the chances of continuing the upward trend, leading to the removal of sellers' stop orders and creating a suitable entry point for long positions with the possibility of reaching the 1.3260 level. The furthest target will be the 1.3300 level, where I plan to take profit. If GBP/USD declines and there is no bullish activity around 1.3179 in the second half of the day, the pressure on the pair will increase significantly. This will also cause a decline, leading to a retest of the next support at 1.3144. Only the formation of a false breakout there will provide a suitable condition for opening long positions. I plan to buy GBP/USD immediately on a rebound from the 1.3108 low, aiming for an intraday correction of 30-35 points.

To open short positions on GBP/USD:

Sellers continue to exert pressure on the pound, and their main task now is to keep the pair below 1.3219. Only a false breakout at this level would be an acceptable option for me to open short positions against the trend, aiming for a correction and a retest of the 1.3179 support. A breakout and subsequent retest of this range from bottom to top will strike a blow to buyers' positions, leading to the removal of stop orders and opening the way to 1.3144, where I expect more active actions from major players. The furthest target will be the 1.3108 level, where I plan to take profit. Testing this level will lead to a decent downward correction of the pair, threatening the continuation of the bullish market for the pound. In the scenario of a GBP/USD rise and no bearish activity at 1.3219 in the second half of the day, sellers will have no choice but to retreat again to the resistance area at 1.3260, which coincides with the monthly high. In that case, I will wait to sell until after a false breakout at the 1.3300 level. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.3340, but only aiming for a downward correction of the pair by 30-35 points within the day.

In the COT report (Commitment of Traders) for August 20, there was a sharp increase in long positions and a slight decrease in short positions. Clearly, more and more people are betting on the pound's growth, which last week demonstrated one of the strongest series of gains in recent times. The market is also not deterred by the fact that the Bank of England is expected to continue cutting interest rates, as everyone is confident in a more aggressive easing policy from the U.S. Federal Reserve. Therefore, it is unlikely that we can speak of the pound's strength here; rather, it is about the weakness of the U.S. dollar, whose problems will persist in the near future, especially against the backdrop of statistics indicating further declines in U.S. inflation expected this week. The latest COT report indicates that long non-commercial positions jumped by 23,031 to 125,634, while short non-commercial positions increased by 3,332 to 58,123. As a result, the gap between long and short positions increased by 3,517.

Indicator Signals:

Moving Averages

Trading is conducted below the 30 and 50-day moving averages, indicating a possible decline in the pair.

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.

Bollinger Bands

If a decline occurs, the lower boundary of the indicator around 1.3219 will act as support.

Description of Indicators:

• Moving Average: Determines the current trend by smoothing out volatility and noise. Period – 50. Marked in yellow on the chart.
• Moving Average: Determines the current trend by smoothing out volatility and noise. Period – 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence): 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 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: The difference between short and long positions of non-commercial traders.