GBP/USD: trading plan for the US session on June 16 (analysis of morning deals). The pound hit 1.2798
June 16, 2023 12:23 pm
In my morning forecast, I drew attention to the level of 1.2798 and recommended making entry decisions based on it. Let’s look at the 5-minute chart and analyze what happened there. The rise and formation of a false breakout at this level allowed for entry points into short positions, but at the time of writing the article, the downward movement was only about 15 points. The technical picture remained unchanged for the second half of the day.
To open long positions on GBP/USD, the following is required:
If trading remains below 1.2798, pressure on the pound will persist. However, the absence of active selling from this level in the first half of the day raises questions about the reliability of 1.2798, so be extremely cautious. US data can push through 1.2798, leading to a new upward rally for the pound. But before that, it would be desirable to test 1.2757. Good indicators of the University of Michigan Consumer Sentiment Index and high inflation expectations can push GBP/USD down at the beginning of the American session. In that case, a false breakout at 1.2757 would be a good entry point for building long positions, with the prospect of another test at 1.2757. A breakthrough and reverse test from above to below this range, which is more likely in the second half of the day, will leave no chances for sellers, forming an additional signal to open long positions with a move towards 1.2837. This will strengthen the upward trend. The ultimate target will be around 1.2876, where I will take a profit.
In the scenario of a decline towards 1.2757 and the absence of activity from buyers, which is more likely, pressure on the pound will increase towards the end of the week. However, it is unlikely to speak of any significant technical changes in the balance of power between players. At best, the pair will be stuck in a sideways channel. In that case, only the defense of the next area at 1.2713, where the moving averages supporting the buyers are located, and a false breakout at that level will signal to open long positions. I plan to buy GBP/USD only on a rebound from 1.2669 with a correction target of 30-35 points intraday.
To open short positions on GBP/USD, the following is required:
Sellers have done everything possible, but the pound seems unwilling to fall. All hope is on strong US data that will help defend 1.2798, where the pound is currently trading. Only another false breakout at 1.2798 and the persistence of divergence on the MACD indicator will form a signal to sell, resulting in a downward movement towards 1.2757. A breakthrough and reverse test from below to above this range will deliver a more significant blow to buyers’ positions at the end of the week, bringing back pressure on GBP/USD and forming a selling signal with a drop to 1.2713. The ultimate target remains at least 1.2669, where I will take a profit.
In the scenario of GBP/USD’s rise and the absence of activity at 1.2798 in the second half of the day, which is more likely, bulls will continue to control the market with the expectation of reaching monthly highs. In that case, I will postpone selling until a resistance test at 1.2837. A false breakout there will provide an entry point for short positions. If there is no downward movement, I will immediately open short positions on GBP/USD on a rebound from 1.2876, but with the expectation of a pair correction down by 30-35 points intraday.
In the COT report (Commitment of Traders) for June 6th, there was a reduction in both short and long positions. The pound has significantly risen recently. This indicates that many market participants continue to bet on an increase in interest rates by the Bank of England. Recent forecasts and expectations that the UK economy will avoid a recession this year also contribute to the demand for risk assets. Ahead of us is a pause in the interest rate hike cycle by the Federal Reserve, which will also favor GBP/USD buyers. The latest COT report stated that non-commercial short positions decreased by 4,056 to 52,579, while non-commercial long positions fell by 5,257 to a level of 65,063. This led to a slight decrease in the non-commercial net position to 12,454 against 13,235 the previous week. The weekly price increased and reached 1.2434 compared to 1.2398.
Indicator signals:
Moving Averages:
Trading is conducted above the 30- and 50-day moving averages, indicating further pair growth.
Note: The author considers the period and prices of the moving averages on the hourly chart (H1) and differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands:
In the event of a decline, the lower boundary of the indicator, around 1.2715, will act as support.
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 (Moving Average Convergence/Divergence) indicator. 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.
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 non-commercial net position is the difference between non-commercial short and long positions.
The material has been provided by InstaForex Company – www.instaforex.com
To open long positions on GBP/USD, the following is required:
If trading remains below 1.2798, pressure on the pound will persist. However, the absence of active selling from this level in the first half of the day raises questions about the reliability of 1.2798, so be extremely cautious. US data can push through 1.2798, leading to a new upward rally for the pound. But before that, it would be desirable to test 1.2757. Good indicators of the University of Michigan Consumer Sentiment Index and high inflation expectations can push GBP/USD down at the beginning of the American session. In that case, a false breakout at 1.2757 would be a good entry point for building long positions, with the prospect of another test at 1.2757. A breakthrough and reverse test from above to below this range, which is more likely in the second half of the day, will leave no chances for sellers, forming an additional signal to open long positions with a move towards 1.2837. This will strengthen the upward trend. The ultimate target will be around 1.2876, where I will take a profit.
In the scenario of a decline towards 1.2757 and the absence of activity from buyers, which is more likely, pressure on the pound will increase towards the end of the week. However, it is unlikely to speak of any significant technical changes in the balance of power between players. At best, the pair will be stuck in a sideways channel. In that case, only the defense of the next area at 1.2713, where the moving averages supporting the buyers are located, and a false breakout at that level will signal to open long positions. I plan to buy GBP/USD only on a rebound from 1.2669 with a correction target of 30-35 points intraday.
To open short positions on GBP/USD, the following is required:
Sellers have done everything possible, but the pound seems unwilling to fall. All hope is on strong US data that will help defend 1.2798, where the pound is currently trading. Only another false breakout at 1.2798 and the persistence of divergence on the MACD indicator will form a signal to sell, resulting in a downward movement towards 1.2757. A breakthrough and reverse test from below to above this range will deliver a more significant blow to buyers’ positions at the end of the week, bringing back pressure on GBP/USD and forming a selling signal with a drop to 1.2713. The ultimate target remains at least 1.2669, where I will take a profit.
In the scenario of GBP/USD’s rise and the absence of activity at 1.2798 in the second half of the day, which is more likely, bulls will continue to control the market with the expectation of reaching monthly highs. In that case, I will postpone selling until a resistance test at 1.2837. A false breakout there will provide an entry point for short positions. If there is no downward movement, I will immediately open short positions on GBP/USD on a rebound from 1.2876, but with the expectation of a pair correction down by 30-35 points intraday.
In the COT report (Commitment of Traders) for June 6th, there was a reduction in both short and long positions. The pound has significantly risen recently. This indicates that many market participants continue to bet on an increase in interest rates by the Bank of England. Recent forecasts and expectations that the UK economy will avoid a recession this year also contribute to the demand for risk assets. Ahead of us is a pause in the interest rate hike cycle by the Federal Reserve, which will also favor GBP/USD buyers. The latest COT report stated that non-commercial short positions decreased by 4,056 to 52,579, while non-commercial long positions fell by 5,257 to a level of 65,063. This led to a slight decrease in the non-commercial net position to 12,454 against 13,235 the previous week. The weekly price increased and reached 1.2434 compared to 1.2398.
Indicator signals:
Moving Averages:
Trading is conducted above the 30- and 50-day moving averages, indicating further pair growth.
Note: The author considers the period and prices of the moving averages on the hourly chart (H1) and differs from the general definition of classical daily moving averages on the daily chart (D1).
Bollinger Bands:
In the event of a decline, the lower boundary of the indicator, around 1.2715, will act as support.
Description of indicators:
The material has been provided by InstaForex Company – www.instaforex.com
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