GBP/USD: trading plan for the US session on August 16th (analysis of morning deals). Inflation remains a headache for the
August 16, 2023 1:26 pm
In my morning forecast, I focused on the 1.2722 level and recommended making market entry decisions from it. Let’s examine the 5-minute chart to understand what happened there. The breakout and retest of this range led to a buy signal, which resulted in an upward movement of more than 40 points. The technical picture was completely revised in the second half of the day.
To open long positions on GBP/USD, the following is required:
Data showing a slower decrease in overall inflation and the maintenance of core prices in the UK led to the strengthening of the British pound in the first half of the day, resulting in a sharp upward movement of the GBP/USD. However, during the American session, everything can change dramatically, as the publication of figures on the volume of issued building permits and the number of new foundation starts is scheduled, which may lead to a fall in GBP/USD if it becomes clear that there are no problems in this sector in the US. Indicators of growth in industrial production in the US may also put pressure on the pair. But far more interesting will be the Federal Reserve’s July meeting minutes.
Considering that the technical picture has been revised, in the current situation, I would like to ensure the presence of pound buyers in the support area of 1.2723, just below which the moving averages, supporting the bulls. I prefer to act from this level only after forming a false breakout, which will provide an excellent entry point with a growth target to resistance at 1.2764, formed in the first half of the day. A breakout and top-down test of this range against the background of weak US data will form an additional buy signal, strengthening the pound and allowing it to reach a new high of 1.2812. If we exceed this range, we can discuss a surge to 1.2847, where I will take profits.
In the scenario of GBP/USD falling and the absence of buyers at 1.2723 in the second half of the day, especially in the case of strong data on the construction sector and a hawkish Fed statement, pressure on the pair will only intensify, leading to a larger sell-off. If this happens, I will postpone long positions to 1.2688. Buying there will only occur on a false breakout. Long positions on GBP/USD can be opened immediately on the rebound from 1.2654, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD, the following is required:
Bears failed to counter British statistics and have high hopes for the hawkish minutes of the Federal Reserve’s July meeting. Only the formation of a false breakout around 1.2764 after the release of reports on the US construction sector will create a sell signal with the expectation of a decline to the support at 1.27230, formed in the first half of the day. A breakout and bottom-up retest of this range will provide a sell entry point with a target of 1.2688. The next target will be the area of 1.2654, where I will be taking profits. In the scenario of GBP/USD growth and the absence of bears at 1.2764 in the second half of the day, bulls will regain control over the market, leading to an upward correction. In this case, only a false breakout around the next resistance at 1.2812 will provide an entry point for short positions. Without activity, I advise selling GBP/USD from 1.2847, expecting a pair’s rebound down by 30-35 points within the day.
In the COT report (Commitment of Traders) for August 8, there was a reduction in both long and short positions. Traders closed positions ahead of important UK GDP data, understanding that the Bank of England will continue to raise interest rates, whatever it may cost. The released data on the growth rate of the British economy allowed for maintaining balance in the market, preventing the British pound from a quite significant sell-off last week, provoked by another increase in inflation in the US. However, as before, the optimal strategy remains to buy the pound on declines, as the difference in central bank policies will affect the prospects of the US dollar, putting pressure on it. The latest COT report states that long non-commercial positions decreased by 8,936 to 93,239, while short non-commercial positions fell by 6,394 to 36,219. As a result, the spread between long and short positions increased by 185. The weekly price dropped to 1.2749 from 1.2775.
Indicator signals:
Moving Averages
Trading is conducted above the 30- and 50-day moving averages, indicating a bullish market character.
Note: The author considers the period and prices of the moving averages on the H1 hourly chart and differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower border of the indicator at around 1.2680 will act as support.
Description of indicators
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out 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, who use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open positions 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 non-commercial traders’ short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning forecast, I focused on the 1.2722 level and recommended making market entry decisions from it. Let’s examine the 5-minute chart to understand what happened there. The breakout and retest of this range led to a buy signal, which resulted in an upward movement of more than 40 points. The technical picture was completely revised in the second half of the day.
To open long positions on GBP/USD, the following is required:
Data showing a slower decrease in overall inflation and the maintenance of core prices in the UK led to the strengthening of the British pound in the first half of the day, resulting in a sharp upward movement of the GBP/USD. However, during the American session, everything can change dramatically, as the publication of figures on the volume of issued building permits and the number of new foundation starts is scheduled, which may lead to a fall in GBP/USD if it becomes clear that there are no problems in this sector in the US. Indicators of growth in industrial production in the US may also put pressure on the pair. But far more interesting will be the Federal Reserve’s July meeting minutes.
Considering that the technical picture has been revised, in the current situation, I would like to ensure the presence of pound buyers in the support area of 1.2723, just below which the moving averages, supporting the bulls. I prefer to act from this level only after forming a false breakout, which will provide an excellent entry point with a growth target to resistance at 1.2764, formed in the first half of the day. A breakout and top-down test of this range against the background of weak US data will form an additional buy signal, strengthening the pound and allowing it to reach a new high of 1.2812. If we exceed this range, we can discuss a surge to 1.2847, where I will take profits.
In the scenario of GBP/USD falling and the absence of buyers at 1.2723 in the second half of the day, especially in the case of strong data on the construction sector and a hawkish Fed statement, pressure on the pair will only intensify, leading to a larger sell-off. If this happens, I will postpone long positions to 1.2688. Buying there will only occur on a false breakout. Long positions on GBP/USD can be opened immediately on the rebound from 1.2654, with a correction target of 30-35 points within the day.
To open short positions on GBP/USD, the following is required:
Bears failed to counter British statistics and have high hopes for the hawkish minutes of the Federal Reserve’s July meeting. Only the formation of a false breakout around 1.2764 after the release of reports on the US construction sector will create a sell signal with the expectation of a decline to the support at 1.27230, formed in the first half of the day. A breakout and bottom-up retest of this range will provide a sell entry point with a target of 1.2688. The next target will be the area of 1.2654, where I will be taking profits. In the scenario of GBP/USD growth and the absence of bears at 1.2764 in the second half of the day, bulls will regain control over the market, leading to an upward correction. In this case, only a false breakout around the next resistance at 1.2812 will provide an entry point for short positions. Without activity, I advise selling GBP/USD from 1.2847, expecting a pair’s rebound down by 30-35 points within the day.
In the COT report (Commitment of Traders) for August 8, there was a reduction in both long and short positions. Traders closed positions ahead of important UK GDP data, understanding that the Bank of England will continue to raise interest rates, whatever it may cost. The released data on the growth rate of the British economy allowed for maintaining balance in the market, preventing the British pound from a quite significant sell-off last week, provoked by another increase in inflation in the US. However, as before, the optimal strategy remains to buy the pound on declines, as the difference in central bank policies will affect the prospects of the US dollar, putting pressure on it. The latest COT report states that long non-commercial positions decreased by 8,936 to 93,239, while short non-commercial positions fell by 6,394 to 36,219. As a result, the spread between long and short positions increased by 185. The weekly price dropped to 1.2749 from 1.2775.
Indicator signals:
Moving Averages
Trading is conducted above the 30- and 50-day moving averages, indicating a bullish market character.
Note: The author considers the period and prices of the moving averages on the H1 hourly chart and differs from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower border of the indicator at around 1.2680 will act as support.
Description of indicators
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out 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, who use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open positions 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 non-commercial traders’ short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
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