GBP/USD: trading plan for the American session on May 12 (analysis of morning trades). Pound buyers are having trouble with
May 12, 2023 12:22 pm
In my morning forecast, I drew attention to the level of 1.2531 and recommended making decisions on entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. Growth and a false breakout at this level provided excellent entry points for short positions, but the pair have yet to fall significantly. After moving down 15 points, pressure on the pound eased, but the market remained under sellers’ control, leaving chances for the realization of the morning signal. The technical picture for the second half of the day has stayed the same.
To open long positions on GBP/USD, it is required to:
A lot depends on the data on the consumer sentiment index from the University of Michigan, a sharp reduction of which will bring back to the market those wishing to buy the pound at the end of the week in the hope of compensating for yesterday’s fall in the pair. Inflation expectations from the University of Michigan will also be of interest. But despite all this, I plan to act only on a decline from the nearest support of 1.2495. A false breakout formation there after the release of reports will provide a buying signal with the prospect of recovery in the area of 1.2531, which should be broken without any problems. Consolidation above this range and a reverse test from top to bottom will form an additional buying signal with a surge to 1.2567, where the moving averages are playing on the side of the seller’s pass. The furthest target will be the 1.2602 area, where I will fix the profit.
In the case of a decline to around 1.2495 and the absence of buyer activity in the second half of the day, I will postpone purchases to a larger level of 1.2465. I will only open long positions there on a false breakout. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2436, with a 30-35 point correction target within the day.
To open short positions on GBP/USD, it is required:
Sellers showed themselves in the first half of the day, and as long as trading is below 1.2531, a further fall in the pair can be expected. The attractive scenario remains sales at 1.2531, but only after the release of good US statistics and another false breakout. This will give a chance to return pressure on GBP/USD with the prospect of a decline to 1.2495 – this week’s minimum. Breaking through and a reverse test from the bottom to the top of this range will increase pressure on the pound, forming a sell signal with a fall to 1.2465. The furthest target remains the minimum of 1.2436, where I will fix the profit.
In the case of GBP/USD growth and lack of activity at 1.2531, which is more likely, as removing this level will eliminate sellers’ stop orders, it is best to postpone sales until the resistance test at 1.2567. Only a false breakout there will provide an entry point for short positions. If there is no downward movement, I will sell GBP/USD on a rebound directly from 1.2602, but only in anticipation of a pair correction down by 30–35 points within the day.
The COT report (Commitment of Traders) for May 2 showed growth in short positions and a reduction in long ones. Everyone understands that this week the Bank of England has nowhere to go and will have to follow other central banks by raising interest rates. The fight against inflation in the UK will continue for a long time, especially considering that the regulator has not achieved any positive results after a year of raising rates. The pound is unlikely to react to the rate increase of 0.25%, as this is already factored into the quotes, so don’t be surprised if the pair shows a deeper correction this week. The latest COT report says that short non-commercial positions grew by 4,030 to 57,596, while long non-commercial positions decreased by 744 to 58,661. This led to a decrease in the non-commercial net position to 1,065 against 5,839 a week earlier. This is the first decrease in six weeks, so it can be seen as a regular correction. The weekly price rose to 1.2481 from 1.2421.
Indicator signals:
Moving Averages
Trading is conducted below the 30- and 50-day moving averages, indicating further pound depreciation.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart and differs from the general definition of classic daily moving averages on the daily D1 chart.
Bollinger Bands
In case of growth, the upper boundary of the indicator will act as resistance around 1.2531.
Description of indicators
• Moving average (defines the current trend by smoothing out volatility and noise). Period 50. Marked yellow on the chart.
• Moving average (defines the current trend by smoothing out volatility and noise). Period 30. Marked green on the chart.
• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) 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.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial 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 drew attention to the level of 1.2531 and recommended making decisions on entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. Growth and a false breakout at this level provided excellent entry points for short positions, but the pair have yet to fall significantly. After moving down 15 points, pressure on the pound eased, but the market remained under sellers’ control, leaving chances for the realization of the morning signal. The technical picture for the second half of the day has stayed the same.
To open long positions on GBP/USD, it is required to:
A lot depends on the data on the consumer sentiment index from the University of Michigan, a sharp reduction of which will bring back to the market those wishing to buy the pound at the end of the week in the hope of compensating for yesterday’s fall in the pair. Inflation expectations from the University of Michigan will also be of interest. But despite all this, I plan to act only on a decline from the nearest support of 1.2495. A false breakout formation there after the release of reports will provide a buying signal with the prospect of recovery in the area of 1.2531, which should be broken without any problems. Consolidation above this range and a reverse test from top to bottom will form an additional buying signal with a surge to 1.2567, where the moving averages are playing on the side of the seller’s pass. The furthest target will be the 1.2602 area, where I will fix the profit.
In the case of a decline to around 1.2495 and the absence of buyer activity in the second half of the day, I will postpone purchases to a larger level of 1.2465. I will only open long positions there on a false breakout. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2436, with a 30-35 point correction target within the day.
To open short positions on GBP/USD, it is required:
Sellers showed themselves in the first half of the day, and as long as trading is below 1.2531, a further fall in the pair can be expected. The attractive scenario remains sales at 1.2531, but only after the release of good US statistics and another false breakout. This will give a chance to return pressure on GBP/USD with the prospect of a decline to 1.2495 – this week’s minimum. Breaking through and a reverse test from the bottom to the top of this range will increase pressure on the pound, forming a sell signal with a fall to 1.2465. The furthest target remains the minimum of 1.2436, where I will fix the profit.
In the case of GBP/USD growth and lack of activity at 1.2531, which is more likely, as removing this level will eliminate sellers’ stop orders, it is best to postpone sales until the resistance test at 1.2567. Only a false breakout there will provide an entry point for short positions. If there is no downward movement, I will sell GBP/USD on a rebound directly from 1.2602, but only in anticipation of a pair correction down by 30–35 points within the day.
The COT report (Commitment of Traders) for May 2 showed growth in short positions and a reduction in long ones. Everyone understands that this week the Bank of England has nowhere to go and will have to follow other central banks by raising interest rates. The fight against inflation in the UK will continue for a long time, especially considering that the regulator has not achieved any positive results after a year of raising rates. The pound is unlikely to react to the rate increase of 0.25%, as this is already factored into the quotes, so don’t be surprised if the pair shows a deeper correction this week. The latest COT report says that short non-commercial positions grew by 4,030 to 57,596, while long non-commercial positions decreased by 744 to 58,661. This led to a decrease in the non-commercial net position to 1,065 against 5,839 a week earlier. This is the first decrease in six weeks, so it can be seen as a regular correction. The weekly price rose to 1.2481 from 1.2421.
Indicator signals:
Moving Averages
Trading is conducted below the 30- and 50-day moving averages, indicating further pound depreciation.
Note: The author considers the period and prices of the moving averages on the hourly H1 chart and differs from the general definition of classic daily moving averages on the daily D1 chart.
Bollinger Bands
In case of growth, the upper boundary of the indicator will act as resistance around 1.2531.
Description of indicators
• Moving average (defines the current trend by smoothing out volatility and noise). Period 50. Marked yellow on the chart.
• Moving average (defines the current trend by smoothing out volatility and noise). Period 30. Marked green on the chart.
• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) 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.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial 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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