GBP/USD trading plan for European session on June 20, 2023. COT report and overview of yesterday’s trades. The pound slightly
June 20, 2023 9:23 am
Yesterday, there was an entry point. Now let’s look at the 5-minute chart and try to figure out what actually happened. In the morning article, I turned your attention to 1.2802 and recommended making decisions with this level in focus. Although the pair was under slight pressure, it did not break the range. In the second half of the day, a false breakout of 1.2792 produced an entry point, but the pair did not rise.
COT report:
Before going into the technical picture of the pound, let’s look at what happened in the futures market. According to the COT report (Commitment of Traders) for June 13 there was a sharp increase in long and short positions. The pound sterling has risen markedly recently, which attracted the attention of the sellers. However, the aggressive policy of the Bank of England and the latest UK inflation data has brought back new buyers to the market, who are betting on further aggressive tightening. The fact that the Federal Reserve took a pause in the cycle of monetary tightening and the BoE is not going to do so yet makes the British pound more appealing. The latest COT report showed that short non-commercial positions rose by 17,069 to 69,648, while long non-commercial positions jumped by 11,320 to 76,383. It led to a slight decline in the non-commercial net position to 6,736 from 12,454 a week earlier. The weekly price rose to 1.2605 versus 1.2434.
For long positions on GBP/USD:
Today, the economic calendar for the UK is empty again, so bulls will have the chance to regain control after yesterday’s correction and the holiday in the US. However I prefer to act after a decline and false breakout near the nearest support level of 1.2755, which will guarantee the presence of large buyers and could provide an entry point for long positions in continuation of the uptrend towards 1.2801. This is in line with the bearish moving averages, so this level will be important for both sides. A breakout and test of this range will produce another buy signal, with the possibility of a jump to 1.2842, the monthly high from the previous week. Without this level, it will be difficult for the bulls to count on further growth. In case the pair climbs above this range as well, we can also talk about a breakthrough to 1.2876 where I recommend locking in profits.
If the pair declines to 1.2755 and bulls fail to protect this level, the pressure on the pound sterling will increase. In this case, only the protection of 1.2713 as well as a false breakout of this level may create entry points for long positions. You could buy GBP/USD at a bounce from 1.2669, keeping in mind an upward intraday correction of 30-35 pips.
For short positions on GBP/USD:
Bears did their best, but today they may not benefit from the situation. Therefore, it is very important to prevent the pair from going beyond the nearest resistance level of 1.2801, which plays a very important role. A false breakout of this mark forms a sell signal against the bull market, and can push the pair to the support level of 1.2755, where I expect new buyers. A breakout and an upward test of 1.2755 will produce a sell signal to offset last Thursday’s gains and a movement towards 1.2714. A more distant target is a low of 1.2669 where I recommend locking in profits.
If GBP/USD rises and bears fail to defend 1.2801, bulls will control the market. In this case, it would be wise to postpone short positions until a false breakout of the resistance level of 1.2842. If there is no downward movement there, you could sell GBP/USD at a bounce from 1.2876, keeping in mind a downward intraday correction of 30-35 pips.
Indicator signals:
Moving Averages
Trading is performed below the 30- and 50-day moving averages, indicating an attempt to build a downward correction.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If the pair grows, the upper band of the indicator around 1.2810 will act as resistance. If the pair falls, the lower band of the indicator at 1.2770 will act as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday, there was an entry point. Now let’s look at the 5-minute chart and try to figure out what actually happened. In the morning article, I turned your attention to 1.2802 and recommended making decisions with this level in focus. Although the pair was under slight pressure, it did not break the range. In the second half of the day, a false breakout of 1.2792 produced an entry point, but the pair did not rise.
COT report:
Before going into the technical picture of the pound, let’s look at what happened in the futures market. According to the COT report (Commitment of Traders) for June 13 there was a sharp increase in long and short positions. The pound sterling has risen markedly recently, which attracted the attention of the sellers. However, the aggressive policy of the Bank of England and the latest UK inflation data has brought back new buyers to the market, who are betting on further aggressive tightening. The fact that the Federal Reserve took a pause in the cycle of monetary tightening and the BoE is not going to do so yet makes the British pound more appealing. The latest COT report showed that short non-commercial positions rose by 17,069 to 69,648, while long non-commercial positions jumped by 11,320 to 76,383. It led to a slight decline in the non-commercial net position to 6,736 from 12,454 a week earlier. The weekly price rose to 1.2605 versus 1.2434.
For long positions on GBP/USD:
Today, the economic calendar for the UK is empty again, so bulls will have the chance to regain control after yesterday’s correction and the holiday in the US. However I prefer to act after a decline and false breakout near the nearest support level of 1.2755, which will guarantee the presence of large buyers and could provide an entry point for long positions in continuation of the uptrend towards 1.2801. This is in line with the bearish moving averages, so this level will be important for both sides. A breakout and test of this range will produce another buy signal, with the possibility of a jump to 1.2842, the monthly high from the previous week. Without this level, it will be difficult for the bulls to count on further growth. In case the pair climbs above this range as well, we can also talk about a breakthrough to 1.2876 where I recommend locking in profits.
If the pair declines to 1.2755 and bulls fail to protect this level, the pressure on the pound sterling will increase. In this case, only the protection of 1.2713 as well as a false breakout of this level may create entry points for long positions. You could buy GBP/USD at a bounce from 1.2669, keeping in mind an upward intraday correction of 30-35 pips.
For short positions on GBP/USD:
Bears did their best, but today they may not benefit from the situation. Therefore, it is very important to prevent the pair from going beyond the nearest resistance level of 1.2801, which plays a very important role. A false breakout of this mark forms a sell signal against the bull market, and can push the pair to the support level of 1.2755, where I expect new buyers. A breakout and an upward test of 1.2755 will produce a sell signal to offset last Thursday’s gains and a movement towards 1.2714. A more distant target is a low of 1.2669 where I recommend locking in profits.
If GBP/USD rises and bears fail to defend 1.2801, bulls will control the market. In this case, it would be wise to postpone short positions until a false breakout of the resistance level of 1.2842. If there is no downward movement there, you could sell GBP/USD at a bounce from 1.2876, keeping in mind a downward intraday correction of 30-35 pips.
Indicator signals:
Moving Averages
Trading is performed below the 30- and 50-day moving averages, indicating an attempt to build a downward correction.
Please note that the time period and levels of the moving averages are analyzed only for the H1 chart, which differs from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
If the pair grows, the upper band of the indicator around 1.2810 will act as resistance. If the pair falls, the lower band of the indicator at 1.2770 will act as support.
Description of indicators:
• A moving average of a 50-day period determines the current trend by smoothing volatility and noise; marked in yellow on the chart;
• A moving average of a 30-day period determines the current trend by smoothing volatility and noise; marked in green on the chart;
• MACD Indicator (Moving Average Convergence/Divergence) Fast EMA with a 12-day period; Slow EMA with a 26-day period. SMA with a 9-day period;
• Bollinger Bands: 20-day period;
• Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements;
• Long non-commercial positions represent the total number of long positions opened by non-commercial traders;
• Short non-commercial positions represent the total number of short positions opened by non-commercial traders;
• The non-commercial net position is the difference between short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
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