GBP/USD: trading plan for the US session on October 20th (analysis of morning deals). The pound is under pressure again
October 20, 2023 1:24 pm
In my morning forecast, I drew attention to the level of 1.2092 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at this level provided an excellent entry point for buying, resulting in a rise of more than 35 points. In the second half of the day, the technical picture was partially revised.
To open long positions on GBP/USD, the following is required:
Considering how much the British pound has been falling lately and how quickly it is being bought up around 1.2090, we can expect the pair to stay within a sideways channel today since there is no significant fundamental data from the US. Speeches by American politicians are unlikely to have a strong impact on market direction, although the statements of FOMC members Patrick T. Harker and Loretta Mester are still worth listening to. In the case of a pair’s decline, I plan to act on buying only after the formation of a false breakout around 1.2092, similar to what I discussed earlier. In this case, the bulls’ target will be the nearest resistance at 1.2137, formed by the end of the first half of the day, where the moving averages, playing on the sellers’ side, also pass. Breaking above and holding this range will allow buyers to regain hope for an upward correction, providing a chance for an update to 1.2180. The farthest target will be the area of 1.2216, where I will take a profit. In the scenario of a pair’s decline and the absence of activity at 1.2092 by buyers in the second half of the day, only a false breakout around the next support at 1.2066 will give a signal to open long positions. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2038, with the goal of an intraday correction of 30-35 points.
To open short positions on GBP/USD, the following is required:
Sellers have every chance to maintain control over the market and build a bearish trend. For this reason, it is crucial today not to miss the nearest resistance at 1.2137, which may occur after soft comments from Federal Reserve representatives. Only a false breakout at this level will give a signal to sell, capable of pushing the pair towards support at 1.2092. Breaking and back-testing from bottom to top of this range will deal a more serious blow to the bulls’ positions, opening the way to 1.2066, the last hope for buyers. The ultimate target will be the monthly minimum of 1.2038, where I will take a profit. In the event of GBP/USD rising and no activity at 1.2137 in the second half of the day, demand for the pound will return, and buyers will have a chance to build an upward correction. In this case, I will postpone selling until a false breakout at 1.2180. In the absence of a downward movement, I will sell GBP/USD immediately on a rebound from 1.2216, but only counting on a pair’s downward correction of 30-35 points.
In the COT report (Commitment of Traders) for October 10, there was a decrease in both long and short positions. This only indicates that traders slightly adjusted their positions before a fairly important US inflation report was released at the end of last week. Considering that the rise in prices in the US continued, it is likely to have a negative impact on the Federal Reserve’s decision regarding interest rates. Therefore, despite a fairly decent upward correction of the pound, all of this may end with another major sell-off and a drop in the pair to new monthly lows. This week, there are quite a few Federal Reserve representatives speaking, which will serve as our guideline. In the latest COT report, it is stated that long non-commercial positions decreased by 7,621 to 66,290, while short non-commercial positions decreased by 4,253 to 76,338. As a result, the spread between long and short positions decreased by 836. The weekly price increased and amounted to 1.2284 versus 1.2091.
Indicator Signals:
Moving Averages
Trading is taking place below the 30 and 50-day moving averages, indicating a further decline in the pair.
Note: The author examines the period and prices of moving averages on the H1 hourly chart, which differs from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of a decline, the lower boundary of the indicator around 1.2100 will act as support.
Description of indicators:
Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.Moving Average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.MACD Indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9.Bollinger Bands (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 drew attention to the level of 1.2092 and recommended making trading decisions based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at this level provided an excellent entry point for buying, resulting in a rise of more than 35 points. In the second half of the day, the technical picture was partially revised.
To open long positions on GBP/USD, the following is required:
Considering how much the British pound has been falling lately and how quickly it is being bought up around 1.2090, we can expect the pair to stay within a sideways channel today since there is no significant fundamental data from the US. Speeches by American politicians are unlikely to have a strong impact on market direction, although the statements of FOMC members Patrick T. Harker and Loretta Mester are still worth listening to. In the case of a pair’s decline, I plan to act on buying only after the formation of a false breakout around 1.2092, similar to what I discussed earlier. In this case, the bulls’ target will be the nearest resistance at 1.2137, formed by the end of the first half of the day, where the moving averages, playing on the sellers’ side, also pass. Breaking above and holding this range will allow buyers to regain hope for an upward correction, providing a chance for an update to 1.2180. The farthest target will be the area of 1.2216, where I will take a profit. In the scenario of a pair’s decline and the absence of activity at 1.2092 by buyers in the second half of the day, only a false breakout around the next support at 1.2066 will give a signal to open long positions. I plan to buy GBP/USD immediately on a rebound only from the minimum of 1.2038, with the goal of an intraday correction of 30-35 points.
To open short positions on GBP/USD, the following is required:
Sellers have every chance to maintain control over the market and build a bearish trend. For this reason, it is crucial today not to miss the nearest resistance at 1.2137, which may occur after soft comments from Federal Reserve representatives. Only a false breakout at this level will give a signal to sell, capable of pushing the pair towards support at 1.2092. Breaking and back-testing from bottom to top of this range will deal a more serious blow to the bulls’ positions, opening the way to 1.2066, the last hope for buyers. The ultimate target will be the monthly minimum of 1.2038, where I will take a profit. In the event of GBP/USD rising and no activity at 1.2137 in the second half of the day, demand for the pound will return, and buyers will have a chance to build an upward correction. In this case, I will postpone selling until a false breakout at 1.2180. In the absence of a downward movement, I will sell GBP/USD immediately on a rebound from 1.2216, but only counting on a pair’s downward correction of 30-35 points.
In the COT report (Commitment of Traders) for October 10, there was a decrease in both long and short positions. This only indicates that traders slightly adjusted their positions before a fairly important US inflation report was released at the end of last week. Considering that the rise in prices in the US continued, it is likely to have a negative impact on the Federal Reserve’s decision regarding interest rates. Therefore, despite a fairly decent upward correction of the pound, all of this may end with another major sell-off and a drop in the pair to new monthly lows. This week, there are quite a few Federal Reserve representatives speaking, which will serve as our guideline. In the latest COT report, it is stated that long non-commercial positions decreased by 7,621 to 66,290, while short non-commercial positions decreased by 4,253 to 76,338. As a result, the spread between long and short positions decreased by 836. The weekly price increased and amounted to 1.2284 versus 1.2091.
Indicator Signals:
Moving Averages
Trading is taking place below the 30 and 50-day moving averages, indicating a further decline in the pair.
Note: The author examines the period and prices of moving averages on the H1 hourly chart, which differs from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the event of a decline, the lower boundary of the indicator around 1.2100 will act as support.
Description of indicators:
Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked on the chart in yellow.Moving Average (determines the current trend by smoothing volatility and noise). Period 30. Marked on the chart in green.MACD Indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9.Bollinger Bands (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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