GBP/USD: trading plan for the US session on September 6th (analysis of morning deals). The pound continues to be sold
September 6, 2023 1:23 pm
In my morning forecast, I drew attention to the level of 1.2585 and recommended making decisions based on it for market entry. 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 a sell signal, which, at the time of writing this article, had already led to a drop in the pair by more than 30 points. The technical picture for the second half of the day remained unchanged.
To open long positions on GBP/USD, the following is required:
A positive report on activity in the UK construction sector helped the pound in the first half of the day, but now all eyes are on Bailey’s speech and his statements. If his tone is hawkish, it will benefit the pound, leading to another surge towards 1.2585. If we don’t hear anything substantial from the Bank of England governor, bears are likely to push the market towards weekly lows. I will only act at 1.2529 if a false breakout is formed, providing an entry point for buying with a rebound to 1.2585. Moving averages are positioned there, playing on the sellers’ side. Breaking and holding above this range will strengthen buyer confidence, providing a buying signal and preserving the chance to reach 1.2626. The ultimate target remains the 1.2670 area, where I will take profits. In the scenario of a drop to 1.2529 and the absence of buyers in the second half of the day, pressure on the pound will persist, along with the likelihood of further significant declines in the pair. In this case, only defending the next area at 1.2488, along with a false breakout there, will provide a signal to open long positions. I plan to buy GBP/USD on a rebound only from the minimum of 1.2419 with a target of a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
Bears still need to defend the nearest resistance at 1.2585, where moving averages are located. However, it is worth understanding that we have already received one entry point there, so it is far from certain that sellers will act as actively as they did in the morning. Only after an unsuccessful consolidation, similar to what I discussed earlier, can we get a sell signal with the prospect of further decline towards 1.2529. Breaking and testing from below to above this range will deal a more serious blow to the bull positions, providing an opportunity to revisit the monthly low of 1.2488. The ultimate target remains the 1.2444 area, where I will take profits. In the scenario of GBP/USD rising and the absence of activity at 1.2585 in the second half of the day, and Bailey’s speech possibly taking on a hawkish tone, buyers will try to re-enter the market. In this case, I will postpone selling until a false breakout at 1.2626. If there is no downward movement there, I will sell the pound on a rebound right from 1.2670, but only counting on a pair correction of 30-35 points within the day.
In the COT report (Commitment of Traders) for August 29, there was a reduction in long positions and an increase in short positions. Strong US labor market data and Federal Reserve Chairman Jerome Powell’s speech were the main reasons for a sharp increase in short positions on the pound. Considering that recent statistics from the UK have been rather bleak, indicating an impending recession, pressure on the pound is likely to persist in the coming autumn. However, buyers can take advantage of this, as the lower the pound goes, the more attractive it becomes for medium-term purchases. The divergence in central bank policies will continue to have a positive impact on GBP/USD. In the latest COT report, it is mentioned that long non-commercial positions decreased by only 918 to 97,143, while short non-commercial positions increased by 9,788 to 48,742. As a result, the spread between long and short positions jumped by 124. The weekly price dropped to 1.2624 from 1.2741.
Indicator Signals:
Moving Averages
Trading is taking place below the 30 and 50-day moving averages, indicating further decline in the pair.
Note: The author considers 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 case of a decrease, the lower boundary of the indicator at around 1.2540 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 specific 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 net non-commercial 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 1.2585 and recommended making decisions based on it for market entry. 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 a sell signal, which, at the time of writing this article, had already led to a drop in the pair by more than 30 points. The technical picture for the second half of the day remained unchanged.
To open long positions on GBP/USD, the following is required:
A positive report on activity in the UK construction sector helped the pound in the first half of the day, but now all eyes are on Bailey’s speech and his statements. If his tone is hawkish, it will benefit the pound, leading to another surge towards 1.2585. If we don’t hear anything substantial from the Bank of England governor, bears are likely to push the market towards weekly lows. I will only act at 1.2529 if a false breakout is formed, providing an entry point for buying with a rebound to 1.2585. Moving averages are positioned there, playing on the sellers’ side. Breaking and holding above this range will strengthen buyer confidence, providing a buying signal and preserving the chance to reach 1.2626. The ultimate target remains the 1.2670 area, where I will take profits. In the scenario of a drop to 1.2529 and the absence of buyers in the second half of the day, pressure on the pound will persist, along with the likelihood of further significant declines in the pair. In this case, only defending the next area at 1.2488, along with a false breakout there, will provide a signal to open long positions. I plan to buy GBP/USD on a rebound only from the minimum of 1.2419 with a target of a 30-35 point intraday correction.
To open short positions on GBP/USD, the following is required:
Bears still need to defend the nearest resistance at 1.2585, where moving averages are located. However, it is worth understanding that we have already received one entry point there, so it is far from certain that sellers will act as actively as they did in the morning. Only after an unsuccessful consolidation, similar to what I discussed earlier, can we get a sell signal with the prospect of further decline towards 1.2529. Breaking and testing from below to above this range will deal a more serious blow to the bull positions, providing an opportunity to revisit the monthly low of 1.2488. The ultimate target remains the 1.2444 area, where I will take profits. In the scenario of GBP/USD rising and the absence of activity at 1.2585 in the second half of the day, and Bailey’s speech possibly taking on a hawkish tone, buyers will try to re-enter the market. In this case, I will postpone selling until a false breakout at 1.2626. If there is no downward movement there, I will sell the pound on a rebound right from 1.2670, but only counting on a pair correction of 30-35 points within the day.
In the COT report (Commitment of Traders) for August 29, there was a reduction in long positions and an increase in short positions. Strong US labor market data and Federal Reserve Chairman Jerome Powell’s speech were the main reasons for a sharp increase in short positions on the pound. Considering that recent statistics from the UK have been rather bleak, indicating an impending recession, pressure on the pound is likely to persist in the coming autumn. However, buyers can take advantage of this, as the lower the pound goes, the more attractive it becomes for medium-term purchases. The divergence in central bank policies will continue to have a positive impact on GBP/USD. In the latest COT report, it is mentioned that long non-commercial positions decreased by only 918 to 97,143, while short non-commercial positions increased by 9,788 to 48,742. As a result, the spread between long and short positions jumped by 124. The weekly price dropped to 1.2624 from 1.2741.
Indicator Signals:
Moving Averages
Trading is taking place below the 30 and 50-day moving averages, indicating further decline in the pair.
Note: The author considers 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 case of a decrease, the lower boundary of the indicator at around 1.2540 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 specific 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 net non-commercial 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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