GBP/USD: trading plan for the American session on April 18 (analysis of morning trades). The pound grew following the increase
April 18, 2023 3:23 pm
In my morning forecast, I called attention to the level of 1.2395 and recommended making decisions on market entry from it. Let’s look at the 5-minute chart and figure out what happened there. Fixation above this range after the data on earnings growth in the UK allowed for an excellent entry point for buying the pound, which resulted in a growth of more than 40 points. The bears’ defense of resistance at 1.2434 did not bring much success, so the decision was made to exit short positions without allowing losses. The technical picture changed for the second half of the day.
To open long positions on GBP/USD:
The observed wage growth in the US in March will inevitably lead to new inflation, forcing the Bank of England to raise interest rates. This is all good for the British pound, which has already recouped yesterday’s decline and reached a new weekly high. In the second half of the day, reports on the volume of building permits issued and the number of new housing starts in the US are expected, and if they disappoint, I bet on a larger GBP/USD surge upwards. However, we see a correction during the American session, for example, after a speech by FOMC member Michelle Bowman. In that case, the bulls will need to try to protect the new support level of 1.2418, formed due to the first half of the day. A false breakout there will allow for an entry point into long positions with the prospect of a spike to 1.2450. Controlling these levels will be quite an important task, so a breakthrough and fixation above this range will form an additional signal to buy the pound with a movement to 1.2483. The farthest target is 1.2519, but we will unlikely reach it this week. I will fix the profit there. In case of a decline to 1.2418 and a lack of activity from the bulls, it’s better not to rush with purchases. In this case, I will open long positions only on a false breakout in the area of the next support at 1.2386. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2353, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD:
The sellers’ tactic disappointed, as they could not offer anything in the first half of the day. Now the focus is on US statistics, but they will also be on the buyers’ side. For this reason, I do not advise rushing with sales. Only a false breakout at 1.2450, similar to what I discussed above, will give the pound a chance to move, with the prospect of updating the nearest support at 1.2418. After strong real estate market data, a breakthrough and a reverse test from the bottom to the top of this range will increase pressure on GBP/USD, forming a sell signal with a drop to 1.2386. The farthest target remains the minimum of 1.2353, where I will fix the profit. In the case of GBP/USD growth and lack of activity at 1.2450 in the second half of the day, which is also quite likely, it’s better to postpone sales until the next resistance test at 1.2483. Only a false breakout there will provide an entry point into short positions. If there is no downward movement, I will immediately sell GBP/USD on a rebound from the maximum of 1.2519, but only counting on a pair correction downwards by 30-35 points within the day.
The COT report (Commitment of Traders) for April 11 showed an increase in long positions and a decrease in short positions. The data on the UK’s GDP growth rate were generally well-received by the market, so demand the pound remained even despite the downward correction of the pair, which had been anticipated for quite some time. Considering that the Federal Reserve’s aggressive policy is ending, and the Bank of England has no choice but to continue raising interest rates to combat double-digit inflation, demand for the pound can be expected to persist. The correction will be a good reason to enter long positions. The latest COT report states that non-commercial short positions decreased by 3,882 to 57,326, while non-commercial long positions jumped by 8,513 to 54,928. This led to a sharp reduction in the negative value of the non-commercial net position to -2,398 compared to -14,793 a week earlier. The reduction has been taking place for three consecutive weeks, which also confirms the bullish nature of the market. The weekly closing price decreased to 1.2440 compared to 1.2519.
Indicator signals:
Moving Averages
Trading is taking place slightly above the 30 and 50-day moving averages, indicating a change in market direction.
Note: The author considers the moving average periods and prices on an H1 chart and differ from the general definition of classic daily moving averages on a D1 chart.
Bollinger Bands
In case of a decrease, the lower border of the indicator will act as support in the area of 1.2386.
Indicator descriptions
• Moving average (defines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (defines the current trend by smoothing 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.
• Non-commercial long positions represent the total long open position of non-commercial traders.
• Non-commercial short positions represent the total short open position of non-commercial traders.
• The 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
In my morning forecast, I called attention to the level of 1.2395 and recommended making decisions on market entry from it. Let’s look at the 5-minute chart and figure out what happened there. Fixation above this range after the data on earnings growth in the UK allowed for an excellent entry point for buying the pound, which resulted in a growth of more than 40 points. The bears’ defense of resistance at 1.2434 did not bring much success, so the decision was made to exit short positions without allowing losses. The technical picture changed for the second half of the day.
To open long positions on GBP/USD:
The observed wage growth in the US in March will inevitably lead to new inflation, forcing the Bank of England to raise interest rates. This is all good for the British pound, which has already recouped yesterday’s decline and reached a new weekly high. In the second half of the day, reports on the volume of building permits issued and the number of new housing starts in the US are expected, and if they disappoint, I bet on a larger GBP/USD surge upwards. However, we see a correction during the American session, for example, after a speech by FOMC member Michelle Bowman. In that case, the bulls will need to try to protect the new support level of 1.2418, formed due to the first half of the day. A false breakout there will allow for an entry point into long positions with the prospect of a spike to 1.2450. Controlling these levels will be quite an important task, so a breakthrough and fixation above this range will form an additional signal to buy the pound with a movement to 1.2483. The farthest target is 1.2519, but we will unlikely reach it this week. I will fix the profit there. In case of a decline to 1.2418 and a lack of activity from the bulls, it’s better not to rush with purchases. In this case, I will open long positions only on a false breakout in the area of the next support at 1.2386. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2353, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD:
The sellers’ tactic disappointed, as they could not offer anything in the first half of the day. Now the focus is on US statistics, but they will also be on the buyers’ side. For this reason, I do not advise rushing with sales. Only a false breakout at 1.2450, similar to what I discussed above, will give the pound a chance to move, with the prospect of updating the nearest support at 1.2418. After strong real estate market data, a breakthrough and a reverse test from the bottom to the top of this range will increase pressure on GBP/USD, forming a sell signal with a drop to 1.2386. The farthest target remains the minimum of 1.2353, where I will fix the profit. In the case of GBP/USD growth and lack of activity at 1.2450 in the second half of the day, which is also quite likely, it’s better to postpone sales until the next resistance test at 1.2483. Only a false breakout there will provide an entry point into short positions. If there is no downward movement, I will immediately sell GBP/USD on a rebound from the maximum of 1.2519, but only counting on a pair correction downwards by 30-35 points within the day.
The COT report (Commitment of Traders) for April 11 showed an increase in long positions and a decrease in short positions. The data on the UK’s GDP growth rate were generally well-received by the market, so demand the pound remained even despite the downward correction of the pair, which had been anticipated for quite some time. Considering that the Federal Reserve’s aggressive policy is ending, and the Bank of England has no choice but to continue raising interest rates to combat double-digit inflation, demand for the pound can be expected to persist. The correction will be a good reason to enter long positions. The latest COT report states that non-commercial short positions decreased by 3,882 to 57,326, while non-commercial long positions jumped by 8,513 to 54,928. This led to a sharp reduction in the negative value of the non-commercial net position to -2,398 compared to -14,793 a week earlier. The reduction has been taking place for three consecutive weeks, which also confirms the bullish nature of the market. The weekly closing price decreased to 1.2440 compared to 1.2519.
Indicator signals:
Moving Averages
Trading is taking place slightly above the 30 and 50-day moving averages, indicating a change in market direction.
Note: The author considers the moving average periods and prices on an H1 chart and differ from the general definition of classic daily moving averages on a D1 chart.
Bollinger Bands
In case of a decrease, the lower border of the indicator will act as support in the area of 1.2386.
Indicator descriptions
• Moving average (defines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (defines the current trend by smoothing 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.
• Non-commercial long positions represent the total long open position of non-commercial traders.
• Non-commercial short positions represent the total short open position of non-commercial traders.
• The 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
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