GBP/USD: plan for the European session on July 10 (analysis of yesterday's trade). Pound returned to its position after unsuccessful

To open long positions on GBP/USD, you need:

Yesterday's data on the deterioration of the US labor market amid the surge of a new wave of the coronavirus pandemic caused the pound to sharply fall, which formed several signals for entering the market. In my forecast for the afternoon, I advised opening short positions when forming a false breakout at the level of 1.2676, but this range was just a little short, which led to a market reversal and a rapid decline to the support area of 1.2625. If you look at the 5-minute chart, you will see that after a breakout of this range, it was tested from the reverse side, which became a signal to enter the market, counting on a fall to the low of 1.2572, which the pair almost reached in the Asian session. At the moment, the bulls need to fight for the resistance of 1.2625, consolidating on it will be a signal to open long positions in the hopes of continuing growth to the high of 1.2676 and to exit to a larger area of 1.2754, where I recommend taking profits. In case of a downward correction in the first half of the day, you can view purchases when forming a false breakout in the support area of 1.2572, but I recommend opening long positions immediately for a rebound only from the low of 1.2526, counting on a correction of 30-40 points within the day. You also need to remember that the Commitment of Traders (COT) report for June 30 recorded another increase in short and long positions, which indicates confrontation between buyers and sellers. The latter needs to be more active in order to return the wounds to the other side. The COT report indicates that short non-commercial positions increased from the level of 48,170 to the level of 55,414 during the week. Long non-commercial positions rose from the level of 29,654 to the level of 34,424. As a result, the non-commercial net position increased its negative value to -20,990, against -18,516.

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To open short positions on GBP/USD, you need:

News that the UK government is allocating an additional 38 billion to help companies and businesses no longer provide the support for the pound as it did at the beginning of the week. Focus has now shifted back to the complexities of Brexit and the outbreak of COVID-19 worldwide. At the moment, an important task of the bears is to break through and consolidate below the support of 1.2572, since such a scenario can knock down the bullish momentum and cause the pound to sharply fall towards the area of 1.2526. The long-term goal is still the low of 1.2448, where I recommend taking profits. Another important task is to protect resistance at 1.2625. Forming a false breakout on it will be a signal to open short positions. However, it is best to open short positions after updating the larger level of 1.2676, counting on a correction of 30-40 points within the day.

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Indicator signals:

Moving averages

Trading is conducted below 30 and 50 moving averages, which indicates the probability of continuing the downward correction.

Note: the period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break in the lower border of the indicator around 1.2570 will increase the pressure on the pound. Growth will be limited by the upper level of the indicator in the area of 1.2665.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
  • MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial traders are speculators, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet 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 short and long positions of non-commercial traders.
The material has been provided by InstaForex Company - www.instaforex.com