GBP/USD: trading plan for the US session on November 1st (analysis of morning deals). The pound remains in the channel ahead
November 1, 2023 3:24 pm
In my morning forecast, I pointed out the level of 1.2161 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at this level resulted in an excellent entry point for short positions, causing the pair to drop more than 40 pips. In the second half of the day, the technical picture remained unchanged.
To open long positions on GBP/USD, the following is required:
I believe it’s clear to everyone that the further direction of the pound will be determined after the Federal Reserve’s decision on monetary policy. It’s not just the decision itself but also the regulator’s forecasts regarding interest rates. If it’s announced that no one intends to raise them further, the dollar will weaken against the pound, leading to a rise in the pair. If the regulator leaves the door open for further quarter-point rate hikes, which is what everyone expects, the pair may decline, but the downward movement is unlikely to be significant. Only significant changes in policy can influence the balance of power. In the event of continued pressure on the pair during the American session, I will only act after a false breakout is formed around the nearest support level of 1.2120, which was established based on yesterday’s performance. The target will be the resistance at 1.2161, which the pair failed to reach today. Just below it, there are moving averages favoring sellers, which also limit the pair’s upward potential. A breakthrough and consolidation above this range will allow buyers to re-enter the market, signaling the opening of long positions with an update to 1.2197. The furthest target will be the area of 1.2230, where I will take a profit. In the scenario of the pair’s decline and the absence of activity on the part of buyers in the second half of the day at 1.2120, only a false breakout around the 1.2090 minimum will signal the opening of long positions. I plan to buy GBP/USD on a bounce only from 1.2065, with a target of a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
Sellers have shown themselves during the European session, and now we can expect new active actions, but only after the Fed’s decision. Another false breakout around 1.2161 will signal a sale, similar to what I discussed earlier, which can push the pair back to support at 1.2120. A breakthrough and retest from bottom to top of this range will deal a more serious blow to the bull’s positions, opening the way to 1.2091, where I expect an active buyer presence. The next target will be the area of 1.2065, where I will make a profit. In the event of GBP/USD rising and the absence of activity at 1.2161 in the second half of the day (this level has already worked twice today), demand for the pound will return, and buyers will have a chance for a minor upward correction after the Fed’s decision is published. In this case, I will postpone the sales until a false breakout at 1.2197. If there is no downward movement at that level, I will sell GBP/USD immediately on a rebound from 1.2230, but only with the expectation of a 30-35 point intraday correction.
In the COT report (Commitment of Traders) for October 24th, long and short positions increased, changing the balance of power in favor of sellers. Weak data continue to emerge for the UK, indicating a real slowdown in economic growth. The decrease in activity in the manufacturing and services sectors in September of this year is direct evidence of this. However, this week, the Federal Reserve is likely to make a decision to maintain the policy without changes, which will favor the British pound. But considering the data from the US, it’s not excluded that committee members will hint at the possibility of a last rate hike in December of this year, which will strengthen the dollar. The latest COT report states that long non-commercial positions increased by 1,582 to 67,119, while short non-commercial positions jumped by 9,009 to 85,755. As a result, the spread between long and short positions increased by 924. The weekly closing price decreased to 1.2165 from 1.2179.
Indicator Signals:
Moving averages
Trading is taking place below the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages discussed by the author are based on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator at around 1.2125 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 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 positions of non-commercial traders.
• Short non-commercial positions represent the total short open positions 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 pointed out the level of 1.2161 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout at this level resulted in an excellent entry point for short positions, causing the pair to drop more than 40 pips. In the second half of the day, the technical picture remained unchanged.
To open long positions on GBP/USD, the following is required:
I believe it’s clear to everyone that the further direction of the pound will be determined after the Federal Reserve’s decision on monetary policy. It’s not just the decision itself but also the regulator’s forecasts regarding interest rates. If it’s announced that no one intends to raise them further, the dollar will weaken against the pound, leading to a rise in the pair. If the regulator leaves the door open for further quarter-point rate hikes, which is what everyone expects, the pair may decline, but the downward movement is unlikely to be significant. Only significant changes in policy can influence the balance of power. In the event of continued pressure on the pair during the American session, I will only act after a false breakout is formed around the nearest support level of 1.2120, which was established based on yesterday’s performance. The target will be the resistance at 1.2161, which the pair failed to reach today. Just below it, there are moving averages favoring sellers, which also limit the pair’s upward potential. A breakthrough and consolidation above this range will allow buyers to re-enter the market, signaling the opening of long positions with an update to 1.2197. The furthest target will be the area of 1.2230, where I will take a profit. In the scenario of the pair’s decline and the absence of activity on the part of buyers in the second half of the day at 1.2120, only a false breakout around the 1.2090 minimum will signal the opening of long positions. I plan to buy GBP/USD on a bounce only from 1.2065, with a target of a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
Sellers have shown themselves during the European session, and now we can expect new active actions, but only after the Fed’s decision. Another false breakout around 1.2161 will signal a sale, similar to what I discussed earlier, which can push the pair back to support at 1.2120. A breakthrough and retest from bottom to top of this range will deal a more serious blow to the bull’s positions, opening the way to 1.2091, where I expect an active buyer presence. The next target will be the area of 1.2065, where I will make a profit. In the event of GBP/USD rising and the absence of activity at 1.2161 in the second half of the day (this level has already worked twice today), demand for the pound will return, and buyers will have a chance for a minor upward correction after the Fed’s decision is published. In this case, I will postpone the sales until a false breakout at 1.2197. If there is no downward movement at that level, I will sell GBP/USD immediately on a rebound from 1.2230, but only with the expectation of a 30-35 point intraday correction.
In the COT report (Commitment of Traders) for October 24th, long and short positions increased, changing the balance of power in favor of sellers. Weak data continue to emerge for the UK, indicating a real slowdown in economic growth. The decrease in activity in the manufacturing and services sectors in September of this year is direct evidence of this. However, this week, the Federal Reserve is likely to make a decision to maintain the policy without changes, which will favor the British pound. But considering the data from the US, it’s not excluded that committee members will hint at the possibility of a last rate hike in December of this year, which will strengthen the dollar. The latest COT report states that long non-commercial positions increased by 1,582 to 67,119, while short non-commercial positions jumped by 9,009 to 85,755. As a result, the spread between long and short positions increased by 924. The weekly closing price decreased to 1.2165 from 1.2179.
Indicator Signals:
Moving averages
Trading is taking place below the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of the moving averages discussed by the author are based on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator at around 1.2125 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 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 positions of non-commercial traders.
• Short non-commercial positions represent the total short open positions 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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