GBP/USD: trading plan for the US session on November 2nd (analysis of morning deals). The pound was bought back excellently
November 2, 2023 12:25 pm
In my morning forecast, I pointed out the level of 1.2161 and recommended making entry decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at this level led to an excellent entry point for long positions, resulting in the pair rising by almost 40 points. The technical picture remained unchanged for the second half of the day.
To open long positions on GBP/USD, it is required:
It’s evident that pound buyers are inclined towards an upward movement after the Bank of England’s meeting, the results of which will be known shortly. The speech by Governor Andrew Bailey will be crucial, and the regulator’s accommodative stance will likely benefit the economy and the pound. However, the initial reaction may favor sellers, so protecting the 1.2161 support remains a priority for the bulls today. In case of another decline, a false breakout at this level, similar to what I described above, will provide an entry point for long positions with the aim of testing the resistance at 1.2197, which has been elusive all week. A breakthrough and consolidation above this range will trigger the triggering of stop orders by sellers, allowing buyers to return to the market and signaling the opening of long positions with a target at 1.2230. The most distant target will be the area around 1.2258, where I will take a profit. In the scenario of a pair’s decline and a lack of activity at 1.2161 from buyers, only a false breakout near the intermediate support at 1.2127, just above which the moving averages are located, will signal the opening of long positions. I plan to buy GBP/USD immediately on a rebound only from 1.2097, aiming for a pair’s correction of 30-35 points during the day.
To open short positions on GBP/USD, it is required:
Sellers attempted but failed. However, control over the market has not yet been lost. After the Bank of England meeting, it is crucial not to miss the 1.2197 resistance, which serves as the upper boundary of the sideways channel. Only a false breakout at this level, combined with strong data on initial jobless claims in the US and changes in labor productivity in the non-manufacturing sector, will provide a selling signal capable of pushing the pair back to support at 1.2161, just below which the moving averages play on the bull’s side. A breakthrough and a reverse test from bottom to top of this range will deliver a more serious blow to buyers’ positions, leading to the removal of stop orders and opening the path to 1.2127. The more distant target will be the area around 1.2097, where I will take a profit. In the scenario of GBP/USD rising and a lack of activity at 1.2197 in the second half of the day, which seems to be the direction things are heading, demand for the pound will return, and buyers will have a chance to establish an upward trend. In this case, I will postpone selling until a false breakout at 1.2230. If there’s no downward movement there, I will sell GBP/USD immediately on a rebound from 1.2258, but only with the expectation of a pair’s correction of 30-35 pips during the day.
In the COT (Commitment of Traders) report for October 24th, there was an increase in both long and short positions, which changed the balance in favor of sellers. Weak data continues to emerge for the UK, indicating a real slowdown in economic growth. The decrease in activity in the manufacturing and service sectors in September this year is a direct proof of this. However, this week, the Federal Reserve of the United States will hold a meeting, and it is likely that a decision will be made to maintain the policy without changes, which will favor the British pound. But considering the data after the US session, it is not excluded that committee members will hint at the possibility of a final rate hike in December this year, which will strengthen the dollar. The latest COT report indicates 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 price decreased and amounted to 1.2165 against 1.2179.
Indicator Signals:
Moving Averages
Trading is taking place above the 30 and 50-day moving averages, indicating further growth of the pound.
Note: The period and prices of the moving averages considered by the author are on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.
Bollinger Bands
In the event of a decrease, the lower boundary of the indicator around 1.2110 will serve as support.
Description of indicators:
Moving average (a moving average, determining the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.Moving average (a moving average, determining the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.MACD Indicator (Moving Average Convergence/Divergence – the 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 specific requirements.Long non-commercial positions represent the cumulative long open positions of non-commercial traders.Short non-commercial positions represent the cumulative short open positions of non-commercial traders.The cumulative 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 entry decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The drop and the formation of a false breakout at this level led to an excellent entry point for long positions, resulting in the pair rising by almost 40 points. The technical picture remained unchanged for the second half of the day.
To open long positions on GBP/USD, it is required:
It’s evident that pound buyers are inclined towards an upward movement after the Bank of England’s meeting, the results of which will be known shortly. The speech by Governor Andrew Bailey will be crucial, and the regulator’s accommodative stance will likely benefit the economy and the pound. However, the initial reaction may favor sellers, so protecting the 1.2161 support remains a priority for the bulls today. In case of another decline, a false breakout at this level, similar to what I described above, will provide an entry point for long positions with the aim of testing the resistance at 1.2197, which has been elusive all week. A breakthrough and consolidation above this range will trigger the triggering of stop orders by sellers, allowing buyers to return to the market and signaling the opening of long positions with a target at 1.2230. The most distant target will be the area around 1.2258, where I will take a profit. In the scenario of a pair’s decline and a lack of activity at 1.2161 from buyers, only a false breakout near the intermediate support at 1.2127, just above which the moving averages are located, will signal the opening of long positions. I plan to buy GBP/USD immediately on a rebound only from 1.2097, aiming for a pair’s correction of 30-35 points during the day.
To open short positions on GBP/USD, it is required:
Sellers attempted but failed. However, control over the market has not yet been lost. After the Bank of England meeting, it is crucial not to miss the 1.2197 resistance, which serves as the upper boundary of the sideways channel. Only a false breakout at this level, combined with strong data on initial jobless claims in the US and changes in labor productivity in the non-manufacturing sector, will provide a selling signal capable of pushing the pair back to support at 1.2161, just below which the moving averages play on the bull’s side. A breakthrough and a reverse test from bottom to top of this range will deliver a more serious blow to buyers’ positions, leading to the removal of stop orders and opening the path to 1.2127. The more distant target will be the area around 1.2097, where I will take a profit. In the scenario of GBP/USD rising and a lack of activity at 1.2197 in the second half of the day, which seems to be the direction things are heading, demand for the pound will return, and buyers will have a chance to establish an upward trend. In this case, I will postpone selling until a false breakout at 1.2230. If there’s no downward movement there, I will sell GBP/USD immediately on a rebound from 1.2258, but only with the expectation of a pair’s correction of 30-35 pips during the day.
In the COT (Commitment of Traders) report for October 24th, there was an increase in both long and short positions, which changed the balance in favor of sellers. Weak data continues to emerge for the UK, indicating a real slowdown in economic growth. The decrease in activity in the manufacturing and service sectors in September this year is a direct proof of this. However, this week, the Federal Reserve of the United States will hold a meeting, and it is likely that a decision will be made to maintain the policy without changes, which will favor the British pound. But considering the data after the US session, it is not excluded that committee members will hint at the possibility of a final rate hike in December this year, which will strengthen the dollar. The latest COT report indicates 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 price decreased and amounted to 1.2165 against 1.2179.
Indicator Signals:
Moving Averages
Trading is taking place above the 30 and 50-day moving averages, indicating further growth of the pound.
Note: The period and prices of the moving averages considered by the author are on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.
Bollinger Bands
In the event of a decrease, the lower boundary of the indicator around 1.2110 will serve as support.
Description of indicators:
Moving average (a moving average, determining the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.Moving average (a moving average, determining the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.MACD Indicator (Moving Average Convergence/Divergence – the 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 specific requirements.Long non-commercial positions represent the cumulative long open positions of non-commercial traders.Short non-commercial positions represent the cumulative short open positions of non-commercial traders.The cumulative 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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