GBP/USD: trading plan for the American session on May 17 (analysis of morning trades). The pound is trying to repeat yesterday
May 17, 2023 1:23 pm
In my morning forecast, I paid attention to the 1.2467 level and recommended entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. The breakthrough and backtest from the bottom to the top of this range led to an excellent sell signal, which resulted in a downward movement of more than 40 points. Protecting 1.2426 provided entry points for buying GBP/USD with more than 25 points of upward movement. The technical picture was only partially revised for the second half of the day.
For opening long positions on GBP/USD, it is necessary:
The pound repeats yesterday’s day, where after an active failure during the European session, bulls quickly bought up all the downward movement but then gave up their positions in the second half of the day. Whether this will be the case today, we will find out very soon. For the American session, reports on the volume of building permits issued and the number of new foundations laid are planned. Good numbers will put pressure back on the pound, leading to a decrease in the pair and a retest of 1.2426, from where the pair has already bounced back well today. Therefore, only with another false breakout will there be a sufficient reason for a buy signal with the prospect of recovery to 1.2467 – the new resistance formed as a result of today. Securing above this range and a test from top to bottom will form an additional buy signal with a surge to 1.2500, where the moving averages pass. The farthest target will be the 1.2533 area, where I will lock in profits.
In a scenario of a decline to 1.2426 and a complete lack of activity on the part of buyers in the second half of the day, I will postpone purchases until the next monthly minimum of 1.2387 is updated. I will also open long positions there only on a false breakout, similar to what I discussed above. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2353, aiming to correct 30–35 points within the day.
For opening short positions on GBP/USD, it is necessary:
Sellers showed themselves in the first half of the day, but now it is better to take your time with short positions. You can count on a repeat of yesterday, but good data on the state of the real estate market in the US is needed. An attractive selling scenario will be a false breakout at 1.2467 – resistance formed due to the first half of the day. In this case, the bear’s target will be the formation of new pressure on GBP/USD in anticipation of a return to the level of 1.2426, which they still failed to break through below. A breakthrough and a test from the bottom to the top of this range will increase pressure on the pair, forming a sell signal with a fall to 1.2387. The farthest target remains the minimum of 1.2353, where I will lock in profits.
Regarding GBP/USD growth and lack of activity at 1.2467 on weak US data, I will postpone sales until the resistance test at 1.2500, where moving averages pass. Only a false breakout there will provide an entry point for short positions. If there is no downward movement, I will immediately sell GBP/USD on a rebound from 1.2533, but only counting on a pair’s correction down by 30-35 points within the day.
The COT report (Commitment of Traders) for May 9 showed growth in long and short positions. And even though the Bank of England’s decision to raise interest rates is not yet reflected in this data, the active buildup of long positions is a testament to the presence in the market of those willing to buy the pound even at current levels. Given that it corrected pretty well at the end of last week, this will create additional demand for the trading instrument. The latest COT report states that short non-commercial positions grew by 12,900 to 71,561, while long non-commercial positions jumped by 9,437 to a level of 9,437. This led to an increase in the non-commercial net position to 4,528 against 1,065 a week earlier. Growth resumed after a small decline, which will positively affect the pound in the future. The weekly price rose and amounted to 1.2635 against 1.2481.
Indicator signals:
Moving averages
Trading is being conducted below the 30 and 50-day moving averages, which indicates the pair’s further decline.
Note: The author considers the period and prices of moving averages on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of growth, the upper border of the indicator around 1.2510 will act as resistance.
Description of indicators
• Moving average (defines the current trend by smoothing volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (defines the current trend by smoothing volatility and noise). Period 30. It is marked in 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 paid attention to the 1.2467 level and recommended entering the market from there. Let’s look at the 5-minute chart and figure out what happened there. The breakthrough and backtest from the bottom to the top of this range led to an excellent sell signal, which resulted in a downward movement of more than 40 points. Protecting 1.2426 provided entry points for buying GBP/USD with more than 25 points of upward movement. The technical picture was only partially revised for the second half of the day.
For opening long positions on GBP/USD, it is necessary:
The pound repeats yesterday’s day, where after an active failure during the European session, bulls quickly bought up all the downward movement but then gave up their positions in the second half of the day. Whether this will be the case today, we will find out very soon. For the American session, reports on the volume of building permits issued and the number of new foundations laid are planned. Good numbers will put pressure back on the pound, leading to a decrease in the pair and a retest of 1.2426, from where the pair has already bounced back well today. Therefore, only with another false breakout will there be a sufficient reason for a buy signal with the prospect of recovery to 1.2467 – the new resistance formed as a result of today. Securing above this range and a test from top to bottom will form an additional buy signal with a surge to 1.2500, where the moving averages pass. The farthest target will be the 1.2533 area, where I will lock in profits.
In a scenario of a decline to 1.2426 and a complete lack of activity on the part of buyers in the second half of the day, I will postpone purchases until the next monthly minimum of 1.2387 is updated. I will also open long positions there only on a false breakout, similar to what I discussed above. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2353, aiming to correct 30–35 points within the day.
For opening short positions on GBP/USD, it is necessary:
Sellers showed themselves in the first half of the day, but now it is better to take your time with short positions. You can count on a repeat of yesterday, but good data on the state of the real estate market in the US is needed. An attractive selling scenario will be a false breakout at 1.2467 – resistance formed due to the first half of the day. In this case, the bear’s target will be the formation of new pressure on GBP/USD in anticipation of a return to the level of 1.2426, which they still failed to break through below. A breakthrough and a test from the bottom to the top of this range will increase pressure on the pair, forming a sell signal with a fall to 1.2387. The farthest target remains the minimum of 1.2353, where I will lock in profits.
Regarding GBP/USD growth and lack of activity at 1.2467 on weak US data, I will postpone sales until the resistance test at 1.2500, where moving averages pass. Only a false breakout there will provide an entry point for short positions. If there is no downward movement, I will immediately sell GBP/USD on a rebound from 1.2533, but only counting on a pair’s correction down by 30-35 points within the day.
The COT report (Commitment of Traders) for May 9 showed growth in long and short positions. And even though the Bank of England’s decision to raise interest rates is not yet reflected in this data, the active buildup of long positions is a testament to the presence in the market of those willing to buy the pound even at current levels. Given that it corrected pretty well at the end of last week, this will create additional demand for the trading instrument. The latest COT report states that short non-commercial positions grew by 12,900 to 71,561, while long non-commercial positions jumped by 9,437 to a level of 9,437. This led to an increase in the non-commercial net position to 4,528 against 1,065 a week earlier. Growth resumed after a small decline, which will positively affect the pound in the future. The weekly price rose and amounted to 1.2635 against 1.2481.
Indicator signals:
Moving averages
Trading is being conducted below the 30 and 50-day moving averages, which indicates the pair’s further decline.
Note: The author considers the period and prices of moving averages on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of growth, the upper border of the indicator around 1.2510 will act as resistance.
Description of indicators
• Moving average (defines the current trend by smoothing volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (defines the current trend by smoothing volatility and noise). Period 30. It is marked in 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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