GBP/USD: trading plan for European session on May 16, 2023. Commitments of Traders. Overview of yesterday’s trading. GBP
May 16, 2023 10:23 am
Yesterday, several entry signals were made. Let’s look at the 5-minute chart to get a picture of what happened. I considered entering the market from the level of 1.2476. Growth and a false breakout at this level produced an excellent sell entry point, but no downward movement followed. Yesterday morning, I pointed to the fact that after a false breakout at 1.2476, the pound would show a steep drop. If that did not happen, I would close short positions. A breakout and a downside retest of the 1.2476 mark generated a buy signal, which resulted in a rise of more than 30 pips. In the second half of the day, it was the same story with the 1.2506 level.
When to open long positions on GBP/USD:
Before conducting technical analysis, let’s see what happened in the futures market. The COT report (Commitments of Traders) for May 9 showed an increase in both long and short positions. Even though the Bank of England’s decision to raise interest rates is not yet reflected in this data, a surge in long positions indicates the presence of GBP buyers even at current levels. Taking into account a noticeable correction at the end of last week, demand for the trading instrument will likely get stronger. According to the latest COT report, short non-commercial positions rose by 12,900 to 71,561, and long non-commercial positions surged by 9,437 to 9,437. The non-commercial net position increased to 4,528 from 1,065 a week earlier. Growth resumed after a small decrease, which will likely positively affect the pound in the future. The weekly price rose and amounted to 1.2635 against 1.2481.
Amid a slight increase in UK unemployment from its lows and an increase in the claimant count change, GBP/USD fell at the beginning of the European session and a breakout at 1.2497 occurred. Therefore, to open more long positions, I need to protect 1.2464 support. A false breakout will create an excellent entry point with the bullish target at 1.2497, which is in line with the bearish moving averages. A breakout and a downside test of this range will produce an additional buy signal, targeting 1.2532. Without this level, it will be difficult for GBP buyers to extend growth. In case the price goes above this range, quotes may advance to 1.2567, where I will take profit.
If GBP/USD goes down and there is no bullish activity at 1.2464, the pressure on the pound will only increase. If this happens, I will open long positions at 1.2422 on a false breakout only. I will also open long positions on GBP/USD immediately on a bounce from 1.2387, allowing a correction of 30-35 pips intraday.
When to open short positions on GBP/USD:
The sellers lost control of the market yesterday, but today’s data could change everything if the pair consolidates below 1.2497. A false breakout through this level will make a sell signal, targeting the nearest support of 1.2464. A breakout and an upside retest of this range will create a sell entry point with the target at a low of 1.2422, which will allow sellers to resume the bearish trend. The most distant target is seen in the area of 1.2387, where I will take profit.
If GBP/USD goes up and there is no bearish activity at 1.2497, the market will achieve the state of equilibrium, and the situation will stabilize after yesterday’s growth. In this case, only a false breakout through the next resistance of 1.2532 will produce a sell entry point. If there is no activity there too, I will sell GBP/USD from 1.2567, allowing a bearish correction of 30-35 pips intraday.
Indicators’ signals:
Moving averages:
Trading is carried out below the 30-day and 50-day moving averages, which indicates a bearish market.
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Resistance is seen at 1.2545, in line with the upper band. Support stands at 1.2490, in line with the lower band.
Description of indicators
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
Bollinger Bands. Period 20
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 are the total long position of non-commercial traders.
Non-commercial short positions are the total short position of non-commercial traders.
Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
Yesterday, several entry signals were made. Let’s look at the 5-minute chart to get a picture of what happened. I considered entering the market from the level of 1.2476. Growth and a false breakout at this level produced an excellent sell entry point, but no downward movement followed. Yesterday morning, I pointed to the fact that after a false breakout at 1.2476, the pound would show a steep drop. If that did not happen, I would close short positions. A breakout and a downside retest of the 1.2476 mark generated a buy signal, which resulted in a rise of more than 30 pips. In the second half of the day, it was the same story with the 1.2506 level.
When to open long positions on GBP/USD:
Before conducting technical analysis, let’s see what happened in the futures market. The COT report (Commitments of Traders) for May 9 showed an increase in both long and short positions. Even though the Bank of England’s decision to raise interest rates is not yet reflected in this data, a surge in long positions indicates the presence of GBP buyers even at current levels. Taking into account a noticeable correction at the end of last week, demand for the trading instrument will likely get stronger. According to the latest COT report, short non-commercial positions rose by 12,900 to 71,561, and long non-commercial positions surged by 9,437 to 9,437. The non-commercial net position increased to 4,528 from 1,065 a week earlier. Growth resumed after a small decrease, which will likely positively affect the pound in the future. The weekly price rose and amounted to 1.2635 against 1.2481.
Amid a slight increase in UK unemployment from its lows and an increase in the claimant count change, GBP/USD fell at the beginning of the European session and a breakout at 1.2497 occurred. Therefore, to open more long positions, I need to protect 1.2464 support. A false breakout will create an excellent entry point with the bullish target at 1.2497, which is in line with the bearish moving averages. A breakout and a downside test of this range will produce an additional buy signal, targeting 1.2532. Without this level, it will be difficult for GBP buyers to extend growth. In case the price goes above this range, quotes may advance to 1.2567, where I will take profit.
If GBP/USD goes down and there is no bullish activity at 1.2464, the pressure on the pound will only increase. If this happens, I will open long positions at 1.2422 on a false breakout only. I will also open long positions on GBP/USD immediately on a bounce from 1.2387, allowing a correction of 30-35 pips intraday.
When to open short positions on GBP/USD:
The sellers lost control of the market yesterday, but today’s data could change everything if the pair consolidates below 1.2497. A false breakout through this level will make a sell signal, targeting the nearest support of 1.2464. A breakout and an upside retest of this range will create a sell entry point with the target at a low of 1.2422, which will allow sellers to resume the bearish trend. The most distant target is seen in the area of 1.2387, where I will take profit.
If GBP/USD goes up and there is no bearish activity at 1.2497, the market will achieve the state of equilibrium, and the situation will stabilize after yesterday’s growth. In this case, only a false breakout through the next resistance of 1.2532 will produce a sell entry point. If there is no activity there too, I will sell GBP/USD from 1.2567, allowing a bearish correction of 30-35 pips intraday.
Indicators’ signals:
Moving averages:
Trading is carried out below the 30-day and 50-day moving averages, which indicates a bearish market.
Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
Resistance is seen at 1.2545, in line with the upper band. Support stands at 1.2490, in line with the lower band.
Description of indicators
The material has been provided by InstaForex Company – www.instaforex.com
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