GBP/USD: trading plan for the US session on October 23rd (analysis of morning deals). No one wants to buy above 1.2180
October 23, 2023 2:25 pm
In my morning forecast, I drew attention to the level of 1.2180 and recommended using it as a reference point for market entry decisions. Let’s examine the 5-minute chart and see what transpired. The rise and the formation of a false breakout at this level provided an excellent selling point, resulting in a drop of more than 25 points at the time of writing this article. The technical picture remained unchanged for the second half of the day.
To open long positions on GBP/USD:
Considering that trading is taking place within a sideways channel and no fundamental US statistics are expected today, it’s possible to anticipate another attempt by buyers to break above 1.2180 in the latter part of the day. However, I plan to act on buying only after the formation of a false breakout in the mid-channel around 1.2132, where the moving averages play in favor of the bulls. In this case, the target will be the nearest resistance at 1.2180, which has been tested twice over the last three trading days. A breakthrough and consolidation above this range will allow buyers to re-enter the market, providing an opportunity for a retest of 1.2216. The ultimate target will be the area around 1.2247, where I will take a profit. In the scenario of the pair’s decline in the second half of the day and the absence of buyer activity at 1.2132, only a false breakout around the significant support at 1.2092, which has proven itself well, will signal an opportunity to open long positions. I plan to buy GBP/USD immediately upon a rebound from 1.2066, targeting a 30-35 point intraday correction.
To open short positions on GBP/USD:
Sellers have already shown themselves around 1.2180, and as long as trading continues below this range, the pound will remain under pressure. It is evident that retaining control of this level is crucial. Another false breakout at 1.2180 would provide a selling signal similar to what I discussed earlier, capable of pushing the pair towards the support at 1.2132. A breakthrough and a bottom-up test of this range will deal a more serious blow to the bulls’ positions, opening the path to 1.2092. The next target will be the 1.2066 minimum, where I will take a profit. In the scenario of GBP/USD rising and the absence of activity at 1.2180 in the second half of the day, demand for the pound will return, giving buyers a chance to regain control of the market. In this case, I will postpone sales until a false breakout at 1.2216. In the absence of a downward movement, I will sell GBP/USD immediately upon a rebound from 1.2247, but only with the expectation of a pair’s correction down by 30-35 points.
In the COT (Commitment of Traders) report for October 10, there was a reduction in both long and short positions. This indicates that traders adjusted their positions slightly before an important US inflation report was released at the end of last week. Considering that US price increases have continued, this will likely have a negative impact on the Federal Reserve and its interest rate decisions. Despite a fairly good pound upward correction, it could end with another major sell-off and the pair dropping to monthly lows. Many Federal Reserve representatives are speaking this week, which will provide us with guidance. The latest COT report shows that long non-commercial positions decreased by 7,621 to 66,290, while short non-commercial positions fell by 4,253 to 76,338. As a result, the spread between long and short positions decreased by 836. The weekly price increased to 1.2284 from 1.2091.
Indicator Signals:
Moving Averages
Trading is above the 30 and 50-day moving averages, indicating an attempt at a pound rise.
Note: The period and prices of the moving averages are set by the author 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 1.2132 will serve as support.
Indicator Descriptions:
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) 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 total long open position 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 short and long non-commercial positions.
The material has been provided by InstaForex Company – www.instaforex.com
In my morning forecast, I drew attention to the level of 1.2180 and recommended using it as a reference point for market entry decisions. Let’s examine the 5-minute chart and see what transpired. The rise and the formation of a false breakout at this level provided an excellent selling point, resulting in a drop of more than 25 points at the time of writing this article. The technical picture remained unchanged for the second half of the day.
To open long positions on GBP/USD:
Considering that trading is taking place within a sideways channel and no fundamental US statistics are expected today, it’s possible to anticipate another attempt by buyers to break above 1.2180 in the latter part of the day. However, I plan to act on buying only after the formation of a false breakout in the mid-channel around 1.2132, where the moving averages play in favor of the bulls. In this case, the target will be the nearest resistance at 1.2180, which has been tested twice over the last three trading days. A breakthrough and consolidation above this range will allow buyers to re-enter the market, providing an opportunity for a retest of 1.2216. The ultimate target will be the area around 1.2247, where I will take a profit. In the scenario of the pair’s decline in the second half of the day and the absence of buyer activity at 1.2132, only a false breakout around the significant support at 1.2092, which has proven itself well, will signal an opportunity to open long positions. I plan to buy GBP/USD immediately upon a rebound from 1.2066, targeting a 30-35 point intraday correction.
To open short positions on GBP/USD:
Sellers have already shown themselves around 1.2180, and as long as trading continues below this range, the pound will remain under pressure. It is evident that retaining control of this level is crucial. Another false breakout at 1.2180 would provide a selling signal similar to what I discussed earlier, capable of pushing the pair towards the support at 1.2132. A breakthrough and a bottom-up test of this range will deal a more serious blow to the bulls’ positions, opening the path to 1.2092. The next target will be the 1.2066 minimum, where I will take a profit. In the scenario of GBP/USD rising and the absence of activity at 1.2180 in the second half of the day, demand for the pound will return, giving buyers a chance to regain control of the market. In this case, I will postpone sales until a false breakout at 1.2216. In the absence of a downward movement, I will sell GBP/USD immediately upon a rebound from 1.2247, but only with the expectation of a pair’s correction down by 30-35 points.
In the COT (Commitment of Traders) report for October 10, there was a reduction in both long and short positions. This indicates that traders adjusted their positions slightly before an important US inflation report was released at the end of last week. Considering that US price increases have continued, this will likely have a negative impact on the Federal Reserve and its interest rate decisions. Despite a fairly good pound upward correction, it could end with another major sell-off and the pair dropping to monthly lows. Many Federal Reserve representatives are speaking this week, which will provide us with guidance. The latest COT report shows that long non-commercial positions decreased by 7,621 to 66,290, while short non-commercial positions fell by 4,253 to 76,338. As a result, the spread between long and short positions decreased by 836. The weekly price increased to 1.2284 from 1.2091.
Indicator Signals:
Moving Averages
Trading is above the 30 and 50-day moving averages, indicating an attempt at a pound rise.
Note: The period and prices of the moving averages are set by the author 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 1.2132 will serve as support.
Indicator Descriptions:
The material has been provided by InstaForex Company – www.instaforex.com
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