GBP/USD: trading plan for the US session on October 5th (analysis of morning deals). The pound remains in the sights of buyers
October 5, 2023 3:23 pm
In my morning forecast, I drew attention to the level of 1.2110 and recommended making decisions for market entry based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline to around 1.2110 did occur, but it fell short of forming a false breakout by just about 5 points, so I missed the entry point for long positions. In the second half of the day, the technical picture was only partially revised.
To open long positions on GBP/USD, the following is required:
For now, everything is lining up in favor of pound buyers, but ahead, we are expecting data on initial jobless claims and the U.S. trade balance, as well as speeches by FOMC members Loretta Mester and Mary Daly. Of course, it would be preferable to enter the market as low as possible, preferably on a drop in the pair after the data is released, but we’ll see how it goes. In the event of a drop, a false breakout at 1.2117 would signal a buy with the target of a recovery to the nearest resistance at 1.2172. With weak statistics and dovish comments from Federal Reserve officials, a break out and consolidation above this range would be a chance to build an upward correction, boosting buyers’ confidence and giving a sign to open long positions with a goal of 1.2216. The furthest target is at 1.2268, where I will take profits. In the scenario of a decline to 1.2117 and the absence of activity there in the second half of the day, things for pound buyers will take a turn for the worse again, opening the path to the 1.2058 minimum. A false breakout there would signal an entry point for long positions. I plan to buy GBP/USD immediately on a rebound only from 1.2012 with a view to a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
The bears attempted to play out the remaining part of yesterday’s rise, but so far, they haven’t succeeded. The focus should be on U.S. statistics, where good figures will help break below 1.2117. However, the sales on a false breakout near the resistance at 1.2172 remain the more ideal scenario, which would push the pair back to 1.2117. A breakthrough and a reverse test from below to above this range would deal a blow to the bulls’ positions, giving them the opportunity to fall to support at 1.2058, where the pair has already recovered several times this week. The next target is 1.2012, where I will take profits. In the case of GBP/USD moving up during the American session and the absence of bears at 1.2172, buyers will have a chance to continue the upward correction. In this case, I will postpone sales until a false breakout at 1.2216. In the absence of a downward movement there, I will sell the pound immediately on a rebound only from 1.2268, but with the expectation of a 30-35 point intraday correction.
In the COT (Commitment of Traders) report for September 26, there was a reduction in long positions and a very significant increase in short positions. This indicates that there are fewer pound buyers, especially after a series of disappointing economic growth figures for the UK. Considering that the GDP could demonstrate a sharp slowdown in the third quarter, it’s not surprising why the pound is actively falling against the U.S. dollar. In the latest COT report, it is noted that long non-commercial positions decreased by 345 to 84,750, while short non-commercial positions increased by 17,669 to 69,081. As a result, the spread between long and short positions decreased by 702. The weekly price dropped and reached 1.2162, compared to 1.2390.
Indicator Signals:
Moving Averages
Trading is taking place in the area above the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of moving averages considered by the author are on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.2117 will act as support.
Description of indicators
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out 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 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 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 1.2110 and recommended making decisions for market entry based on it. Let’s take a look at the 5-minute chart and analyze what happened there. The decline to around 1.2110 did occur, but it fell short of forming a false breakout by just about 5 points, so I missed the entry point for long positions. In the second half of the day, the technical picture was only partially revised.
To open long positions on GBP/USD, the following is required:
For now, everything is lining up in favor of pound buyers, but ahead, we are expecting data on initial jobless claims and the U.S. trade balance, as well as speeches by FOMC members Loretta Mester and Mary Daly. Of course, it would be preferable to enter the market as low as possible, preferably on a drop in the pair after the data is released, but we’ll see how it goes. In the event of a drop, a false breakout at 1.2117 would signal a buy with the target of a recovery to the nearest resistance at 1.2172. With weak statistics and dovish comments from Federal Reserve officials, a break out and consolidation above this range would be a chance to build an upward correction, boosting buyers’ confidence and giving a sign to open long positions with a goal of 1.2216. The furthest target is at 1.2268, where I will take profits. In the scenario of a decline to 1.2117 and the absence of activity there in the second half of the day, things for pound buyers will take a turn for the worse again, opening the path to the 1.2058 minimum. A false breakout there would signal an entry point for long positions. I plan to buy GBP/USD immediately on a rebound only from 1.2012 with a view to a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
The bears attempted to play out the remaining part of yesterday’s rise, but so far, they haven’t succeeded. The focus should be on U.S. statistics, where good figures will help break below 1.2117. However, the sales on a false breakout near the resistance at 1.2172 remain the more ideal scenario, which would push the pair back to 1.2117. A breakthrough and a reverse test from below to above this range would deal a blow to the bulls’ positions, giving them the opportunity to fall to support at 1.2058, where the pair has already recovered several times this week. The next target is 1.2012, where I will take profits. In the case of GBP/USD moving up during the American session and the absence of bears at 1.2172, buyers will have a chance to continue the upward correction. In this case, I will postpone sales until a false breakout at 1.2216. In the absence of a downward movement there, I will sell the pound immediately on a rebound only from 1.2268, but with the expectation of a 30-35 point intraday correction.
In the COT (Commitment of Traders) report for September 26, there was a reduction in long positions and a very significant increase in short positions. This indicates that there are fewer pound buyers, especially after a series of disappointing economic growth figures for the UK. Considering that the GDP could demonstrate a sharp slowdown in the third quarter, it’s not surprising why the pound is actively falling against the U.S. dollar. In the latest COT report, it is noted that long non-commercial positions decreased by 345 to 84,750, while short non-commercial positions increased by 17,669 to 69,081. As a result, the spread between long and short positions decreased by 702. The weekly price dropped and reached 1.2162, compared to 1.2390.
Indicator Signals:
Moving Averages
Trading is taking place in the area above the 30 and 50-day moving averages, indicating a sideways market.
Note: The period and prices of moving averages considered by the author are on the H1 hourly chart and differ from the general definition of classic daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decline, the lower boundary of the indicator around 1.2117 will act as support.
Description of indicators
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out 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 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 the short and long positions of non-commercial traders.
The material has been provided by InstaForex Company – www.instaforex.com
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