GBP/USD: trading plan for the European session on April 27th. COT report (analysis of yesterday’s deals)
April 27, 2023 8:23 am
Yesterday, several signals were formed to enter the market. Let’s look at the 5-minute chart and figure out what happened there. In my morning forecast, I drew attention to the level of 1.2439 and recommended making decisions to enter the market from there. The breakthrough and reverse test of this level from top to bottom led to a signal to buy the pound, which resulted in the pair’s growth to 1.2470, where sellers took over. The formation of a false breakout there allowed for a sell signal but did not lead to a significant downward movement. In the second half of the day, active actions of sellers around 1.2489 and a false breakout allowed for a sell signal with a downward movement of more than 30 points.
Considering that today there are no fundamental statistics for the UK, pound buyers will have an excellent chance to continue yesterday’s upward trend aimed at updating monthly highs. However, a more active movement of the pair will likely occur only in the second half of the day after the US GDP data.
The main task for pound buyers now is to protect the large support of 1.2454, formed as a result of yesterday. The optimal scenario is a decrease in the pound and the formation of a false breakout at this level, which will allow for a buy signal with the prospect of further recovery to the area of 1.2489 and beyond the sideways channel. A breakout and consolidation above this range will form an additional buy signal with a surge to 1.2515. The furthest target will be the area of 1.2542 – the maximum this month, where I will fix the profit.
With a decline to 1.2454, it is better to spend time with purchases. In this case, I will open long positions only on a false breakout in the area of the next support of 1.2422. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2387, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD, it is required:
Sellers need to show themselves in the area of 1.2489 as if they miss this level. Buyers will return to the market to update weekly and monthly highs. The inability of bulls to break through above 1.2489, as well as a false breakout, will give a chance to return pressure on the pound with the prospect of a decline and test of 1.2454, where the moving averages pass, playing on the side of the bulls. A breakout and reverse test from the bottom to the top of this range will increase pressure on the pound, forming a sell signal with a drop to 1.2422. The furthest target remains the minimum of 1.2387, where I will fix the profit.
Regarding GBP/USD growth and lack of activity at 1.2489, which is most likely in the first half of the day, it is best to postpone sales until the next resistance test at 1.2515. Only a false breakout there will provide an entry point for short positions. Without a downward movement there, I will sell GBP/USD on a rebound immediately from the maximum of 1.2542, but only for a pair correction down by 30-35 points within the day.
The COT report (Commitment of Traders) for April 11 showed an increase in long positions and a reduction in short positions. The latest data on the UK gives traders hope for a further increase in interest rates in the UK, which maintains an interest in the pound. Considering that the aggressive policy of the Federal Reserve System is coming to an end, and the Bank of England has no choice but to continue raising interest rates and fighting double-digit inflation levels, demand for the pound can be expected to be maintained. 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 long non-commercial 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 going on for three weeks in a row, which also confirms the bullish nature of the market. The weekly closing price decreased and amounted to 1.2440 against 1.2519.
Indicator signals:
Moving Averages
Trading is conducted above the 30- and 50-day moving averages, indicating the return of buyers to the market.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
Bollinger Bands
In the event of a decrease, the lower border of the indicator will provide support in the area of 1.2454.
Description of indicators
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. 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, using the futures market for speculative purposes and meeting 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
Yesterday, several signals were formed to enter the market. Let’s look at the 5-minute chart and figure out what happened there. In my morning forecast, I drew attention to the level of 1.2439 and recommended making decisions to enter the market from there. The breakthrough and reverse test of this level from top to bottom led to a signal to buy the pound, which resulted in the pair’s growth to 1.2470, where sellers took over. The formation of a false breakout there allowed for a sell signal but did not lead to a significant downward movement. In the second half of the day, active actions of sellers around 1.2489 and a false breakout allowed for a sell signal with a downward movement of more than 30 points.
Considering that today there are no fundamental statistics for the UK, pound buyers will have an excellent chance to continue yesterday’s upward trend aimed at updating monthly highs. However, a more active movement of the pair will likely occur only in the second half of the day after the US GDP data.
The main task for pound buyers now is to protect the large support of 1.2454, formed as a result of yesterday. The optimal scenario is a decrease in the pound and the formation of a false breakout at this level, which will allow for a buy signal with the prospect of further recovery to the area of 1.2489 and beyond the sideways channel. A breakout and consolidation above this range will form an additional buy signal with a surge to 1.2515. The furthest target will be the area of 1.2542 – the maximum this month, where I will fix the profit.
With a decline to 1.2454, it is better to spend time with purchases. In this case, I will open long positions only on a false breakout in the area of the next support of 1.2422. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2387, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD, it is required:
Sellers need to show themselves in the area of 1.2489 as if they miss this level. Buyers will return to the market to update weekly and monthly highs. The inability of bulls to break through above 1.2489, as well as a false breakout, will give a chance to return pressure on the pound with the prospect of a decline and test of 1.2454, where the moving averages pass, playing on the side of the bulls. A breakout and reverse test from the bottom to the top of this range will increase pressure on the pound, forming a sell signal with a drop to 1.2422. The furthest target remains the minimum of 1.2387, where I will fix the profit.
Regarding GBP/USD growth and lack of activity at 1.2489, which is most likely in the first half of the day, it is best to postpone sales until the next resistance test at 1.2515. Only a false breakout there will provide an entry point for short positions. Without a downward movement there, I will sell GBP/USD on a rebound immediately from the maximum of 1.2542, but only for a pair correction down by 30-35 points within the day.
The COT report (Commitment of Traders) for April 11 showed an increase in long positions and a reduction in short positions. The latest data on the UK gives traders hope for a further increase in interest rates in the UK, which maintains an interest in the pound. Considering that the aggressive policy of the Federal Reserve System is coming to an end, and the Bank of England has no choice but to continue raising interest rates and fighting double-digit inflation levels, demand for the pound can be expected to be maintained. 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 long non-commercial 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 going on for three weeks in a row, which also confirms the bullish nature of the market. The weekly closing price decreased and amounted to 1.2440 against 1.2519.
Indicator signals:
Moving Averages
Trading is conducted above the 30- and 50-day moving averages, indicating the return of buyers to the market.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
Bollinger Bands
In the event of a decrease, the lower border of the indicator will provide support in the area of 1.2454.
Description of indicators
• Moving average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period 30. 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, using the futures market for speculative purposes and meeting 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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