GBP/USD trading plan for European session on June 29, 2023. COT report and overview of yesterday’s trades. The pound is losing
June 29, 2023 9:22 am
Yesterday, there were good entry points. Now let’s look at the 5-minute chart and try to figure out what actually happened. There were no entry points in the first half of the day due to low volatility. In the second half of the day, a false breakout of 1.2692 produced a buy signal, but the pair only grew by about 20 pips, and then the pair was under pressure again. On the second attempt, the bears made a breakout and a retest to 1.2962, which gave a sell signal. As a result, the pair dipped by over 70 pips.
For long positions on GBP/USD:
Considering that the bears managed to break the pair’s potential for growth, triggering stop-orders below 1.2700, which I turned your attention to yesterday, the pair sharply fell. The downturn is likely to persist if the UK reports on the M4 Money Supply, the number of approved mortgage applications and the net lending to individuals turn out to be worse than economists’ expectations. We don’t expect a reaction to Bank of England’s ILC member Silvana Tenreyro’s speech, as BoE Governor Andrew Bailey already said everything the market wanted to hear.
Bulls remain focused on the support level at 1.2607, formed by yesterday’s results, eagerly awaiting a false breakout and a buy signal for GBP/USD. In such a scenario, the nearest resistance level at 1.2651 becomes the target for recovery. If the bulls are planning to count on something by the end of the month, they need to aim for this level. A breakout and establishing a foothold above 1.2651 would generate an additional buy signal, paving the way for 1.2698, which is in line with the bearish moving averages. The most distant target lies at 1.2748, where I will take profit.
If the pair declines to 1.2607 and bulls fail to protect this level, downward pressure on the pound will remain strong, leading to a more substantial downside move towards 1.2569. Safeguarding this area, along with a false breakout, would provide a signal for opening long positions. You could buy GBP/USD at a bounce from 1.2527, keeping in mind an intraday correction of 30-35 pips, although reaching that level seems unlikely.
For short positions on GBP/USD:
Bears achieved their objectives yesterday, and their primary goal now is not to miss 1.2651, where there could be a breakthrough in the first half of the day after the release of the UK credit data. A false breakout of this level would trigger a sell signal, renewing downward pressure on the pair and aiming to renew the support level at 1.2607, which was formed yesterday. A breakout and subsequent upward retest would deal a more severe blow to the positions of bulls, potentially pushing GBP/USD towards 1.2569. The most distant target remains at 1.2527, where I will take profits.
If GBP/USD rises and bears fail to defend 1.2651, for this to happen, the bulls should gather and rely on the lending report. In the context of a sharp decline in risk appetite, it will not be enough, in this case, it would be wise to postpone short positions until the resistance level at 1.2698 has been tested. A false breakout on this mark will produce a sell signal. If there is no downward movement there, you could sell GBP/USD at a bounce from 1.2748, keeping in mind a downward intraday correction of 30-35 pips.
COT report:
The Commitment of Traders (COT) report for June 13 showed that both long and short positions increased sharply. The pound sterling has risen significantly recently, attracting the attention of bears. However, the aggressive policy of the Bank of England and the latest inflation data in the UK are bringing new bulls into the market, who are expecting further interest rate hikes. The fact that the Federal Reserve has paused its tightening cycle while the Bank of England has no plans to do so makes GBP quite attractive. The latest COT report states that short non-commercial positions increased by 17,069 to 69,648, while long non-commercial positions jumped by 11,320 to 76,383. The non-commercial net position decreased to 6,736 from 12,454 in the previous week. The weekly price rose to 1.2605 from 1.2434.
Indicator signals:
Moving Averages
Trading is performed below the 30- and 50-day moving averages, which indicates a possible bearish 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 falls, the lower band of the indicator at 1.2607 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 were good entry points. Now let’s look at the 5-minute chart and try to figure out what actually happened. There were no entry points in the first half of the day due to low volatility. In the second half of the day, a false breakout of 1.2692 produced a buy signal, but the pair only grew by about 20 pips, and then the pair was under pressure again. On the second attempt, the bears made a breakout and a retest to 1.2962, which gave a sell signal. As a result, the pair dipped by over 70 pips.
For long positions on GBP/USD:
Considering that the bears managed to break the pair’s potential for growth, triggering stop-orders below 1.2700, which I turned your attention to yesterday, the pair sharply fell. The downturn is likely to persist if the UK reports on the M4 Money Supply, the number of approved mortgage applications and the net lending to individuals turn out to be worse than economists’ expectations. We don’t expect a reaction to Bank of England’s ILC member Silvana Tenreyro’s speech, as BoE Governor Andrew Bailey already said everything the market wanted to hear.
Bulls remain focused on the support level at 1.2607, formed by yesterday’s results, eagerly awaiting a false breakout and a buy signal for GBP/USD. In such a scenario, the nearest resistance level at 1.2651 becomes the target for recovery. If the bulls are planning to count on something by the end of the month, they need to aim for this level. A breakout and establishing a foothold above 1.2651 would generate an additional buy signal, paving the way for 1.2698, which is in line with the bearish moving averages. The most distant target lies at 1.2748, where I will take profit.
If the pair declines to 1.2607 and bulls fail to protect this level, downward pressure on the pound will remain strong, leading to a more substantial downside move towards 1.2569. Safeguarding this area, along with a false breakout, would provide a signal for opening long positions. You could buy GBP/USD at a bounce from 1.2527, keeping in mind an intraday correction of 30-35 pips, although reaching that level seems unlikely.
For short positions on GBP/USD:
Bears achieved their objectives yesterday, and their primary goal now is not to miss 1.2651, where there could be a breakthrough in the first half of the day after the release of the UK credit data. A false breakout of this level would trigger a sell signal, renewing downward pressure on the pair and aiming to renew the support level at 1.2607, which was formed yesterday. A breakout and subsequent upward retest would deal a more severe blow to the positions of bulls, potentially pushing GBP/USD towards 1.2569. The most distant target remains at 1.2527, where I will take profits.
If GBP/USD rises and bears fail to defend 1.2651, for this to happen, the bulls should gather and rely on the lending report. In the context of a sharp decline in risk appetite, it will not be enough, in this case, it would be wise to postpone short positions until the resistance level at 1.2698 has been tested. A false breakout on this mark will produce a sell signal. If there is no downward movement there, you could sell GBP/USD at a bounce from 1.2748, keeping in mind a downward intraday correction of 30-35 pips.
COT report:
The Commitment of Traders (COT) report for June 13 showed that both long and short positions increased sharply. The pound sterling has risen significantly recently, attracting the attention of bears. However, the aggressive policy of the Bank of England and the latest inflation data in the UK are bringing new bulls into the market, who are expecting further interest rate hikes. The fact that the Federal Reserve has paused its tightening cycle while the Bank of England has no plans to do so makes GBP quite attractive. The latest COT report states that short non-commercial positions increased by 17,069 to 69,648, while long non-commercial positions jumped by 11,320 to 76,383. The non-commercial net position decreased to 6,736 from 12,454 in the previous week. The weekly price rose to 1.2605 from 1.2434.
Indicator signals:
Moving Averages
Trading is performed below the 30- and 50-day moving averages, which indicates a possible bearish 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 falls, the lower band of the indicator at 1.2607 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