GBP/USD trading plan for North American session on October 6, 2023. Overview of morning trades. GBP to rise only on weak
October 6, 2023 11:22 am
In my morning review, I mentioned the level of 1.2186 as a possible entry point. Let’s have a look at what happened on the 5-minute chart. The price broke through the 1.2186 level but failed to retest it, leaving us with no suitable entry points. For the second half of the day, the technical setup has been reviewed.
For long positions on GBP/USD
Apparently, the data on nonfarm payrolls in the US may shift the balance in the market. The Fed will definitely take this report into account to determine its future policy. A steep drop in new jobs in the non-agricultural sector, just as it happened in the private sector on Wednesday, will exert more pressure on the US dollar. If so, risk assets will get a chance to develop an upside correction. If the reading comes in line with the forecast or exceeds it, the greenback will gain strength, thus pushing the euro/dollar pair lower. I will go long only after a decline and a false breakout at 1.2164 where moving averages are found. This will generate a buy signal with a prospect of recovery towards the nearest resistance at 1.2216. Breaking and settling above this range amid downbeat jobs data in the US will favor the continuation of the upside correction to 1.2268. The ultimate target will be the 1.2327 area where I will be looking to take profits. However, this can only be possible if the US data turns out to be extremely bad. If the pair declines to 1.2164 without any buying activity in the second half of the day, bearish pressure on the pound will likely return and pave the way for 1.2108. A false breakout at this level will signal a buying opportunity. I will buy GBP/USD immediately on a rebound from the low of 1.2058, aiming for a daily intraday correction of 30-35 pips.
For short positions on GBP/USD
At the moment, bears prefer to wait, so their main goal for now is to protect the nearest resistance at 1.2216 or perform a false breakout at this point. A failed attempt to break above this range on strong data from the US labor market will create a sell signal that may bring the price down to 1.2164, which is also a new support level from yesterday. Breaking and retesting this level from below will deliver a serious blow to bullish positions, paving the way for the low of 1.2108 from where the pair has rebounded several times this week. The downward target is found at 1.2058 where I will be taking profit. If GBP/USD rises and bears show no activity at 1.2216 in the afternoon, the selling pressure will ease and bulls will get a chance to continue the upside correction. In this case, I will delay going short at least until the price makes a false breakout at 1.2268. If there is no downward movement there, I will sell the pound immediately on a rebound from 1.2327, targeting an intraday correction of 30-35 pips.
COT report
The Commitments of Traders report for September 26 indicated a reduction in long positions and a strong rise in the long ones. This suggests that the number of pound buyers is decreasing, especially after a batch of disappointing statistics reflecting weak economic growth in the UK. Considering that UK GDP may show even a sharper slowdown in the third quarter, it is not surprising why the pound is rapidly depreciating against the US dollar. The latest COT report states that long non-commercial positions fell by 345 to 84,750, while short non-commercial positions increased by 17,669 to 69,081. As a result, the spread between long and short positions narrowed by 702. The weekly closing price fell to 1.2162 from 1.2390.
Indicator signals:
Moving Averages
Trading above the 30- and 50-day moving averages indicates a further advance of the pound.
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 declines, the lower band of the indicator at 1.2164 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
In my morning review, I mentioned the level of 1.2186 as a possible entry point. Let’s have a look at what happened on the 5-minute chart. The price broke through the 1.2186 level but failed to retest it, leaving us with no suitable entry points. For the second half of the day, the technical setup has been reviewed.
For long positions on GBP/USD
Apparently, the data on nonfarm payrolls in the US may shift the balance in the market. The Fed will definitely take this report into account to determine its future policy. A steep drop in new jobs in the non-agricultural sector, just as it happened in the private sector on Wednesday, will exert more pressure on the US dollar. If so, risk assets will get a chance to develop an upside correction. If the reading comes in line with the forecast or exceeds it, the greenback will gain strength, thus pushing the euro/dollar pair lower. I will go long only after a decline and a false breakout at 1.2164 where moving averages are found. This will generate a buy signal with a prospect of recovery towards the nearest resistance at 1.2216. Breaking and settling above this range amid downbeat jobs data in the US will favor the continuation of the upside correction to 1.2268. The ultimate target will be the 1.2327 area where I will be looking to take profits. However, this can only be possible if the US data turns out to be extremely bad. If the pair declines to 1.2164 without any buying activity in the second half of the day, bearish pressure on the pound will likely return and pave the way for 1.2108. A false breakout at this level will signal a buying opportunity. I will buy GBP/USD immediately on a rebound from the low of 1.2058, aiming for a daily intraday correction of 30-35 pips.
For short positions on GBP/USD
At the moment, bears prefer to wait, so their main goal for now is to protect the nearest resistance at 1.2216 or perform a false breakout at this point. A failed attempt to break above this range on strong data from the US labor market will create a sell signal that may bring the price down to 1.2164, which is also a new support level from yesterday. Breaking and retesting this level from below will deliver a serious blow to bullish positions, paving the way for the low of 1.2108 from where the pair has rebounded several times this week. The downward target is found at 1.2058 where I will be taking profit. If GBP/USD rises and bears show no activity at 1.2216 in the afternoon, the selling pressure will ease and bulls will get a chance to continue the upside correction. In this case, I will delay going short at least until the price makes a false breakout at 1.2268. If there is no downward movement there, I will sell the pound immediately on a rebound from 1.2327, targeting an intraday correction of 30-35 pips.
COT report
The Commitments of Traders report for September 26 indicated a reduction in long positions and a strong rise in the long ones. This suggests that the number of pound buyers is decreasing, especially after a batch of disappointing statistics reflecting weak economic growth in the UK. Considering that UK GDP may show even a sharper slowdown in the third quarter, it is not surprising why the pound is rapidly depreciating against the US dollar. The latest COT report states that long non-commercial positions fell by 345 to 84,750, while short non-commercial positions increased by 17,669 to 69,081. As a result, the spread between long and short positions narrowed by 702. The weekly closing price fell to 1.2162 from 1.2390.
Indicator signals:
Moving Averages
Trading above the 30- and 50-day moving averages indicates a further advance of the pound.
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 declines, the lower band of the indicator at 1.2164 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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