GBP/USD: plan for the European session on November 26. COT reports. No progress in Brexit talks, pound refuses to give up

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

Yesterday's news that there was no progress in trade talks weighed on the pound in the first half of the day, which resulted in producing another entry point for short positions from the 1.3376 level. The downward movement was about 40 points. Then the bears tried to gain a foothold below 1.3325, but this signal did not bring the desired result. Closer to the middle of the US session, the bulls managed to return to the 1.3325 level and tested it from top to bottom, which produced an excellent entry point into long positions, in hopes to return to the monthly high, which happened. I marked all the entry points on the 5-minute chart.

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The pound's succeeding direction will depend on Brexit news. Yesterday, the president of the European Commission said that so far there has been no progress in negotiations, which weighed on the pair, however, poor data on the state of the American economy did not allow the bears to fully realize their potential. Buyers are currently focused on the high of 1.3395. Getting the pair to settle above this area and testing it from top to bottom produces a fairly good signal to buy GBP/USD in hopes to rise towards 1.3453. The next goal will be a high of 1.3509, where I recommend taking profits. In case the pound falls in the first half of the day, forming a false breakout in the 1.3354 area will be a signal to open long positions. In the absence of bullish activity, and since important fundamental data on the UK economy will not be released today, it is best to postpone long deals until the lower border of the 1.3305 horizontal channel has been updated, which is where the pair is located for the entire week. You can buy the pound there immediately on a rebound, counting on an upward correction of 15-20 points.

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

The bears are still struggling to maintain control over the 1.3395 level, which is also a monthly high. Forming a false breakout there will result in producing a signal to open short positions in hopes to return to support at 1.3354. Its breakdown and getting the pair to settle below it is necessary in order to return large sellers to the market, this will quickly push GBP/USD into the area of the lower border of the 1.3305 horizontal channel, which is where I recommend taking profit. We can only talk about bringing back the bear market after the breakdown of 1.3305, which will lead to removing a number of buyers' stop orders and the pair falling to a low of 1.3251. If the bears are not active in the first half of the day and the pair approaches the 1.3395 level again, then it is best to abandon short positions until a new high is updated in the 1.3453 area, where you can sell the pound right away on a rebound, counting on a correction of 20-30 points within the day.

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The Commitment of Traders (COT) reports for November 17 saw a reduction in long positions and a sharp inflow of short positions. Long non-commercial positions declined from 27,872 to 27,454. At the same time, short non-commercial positions increased from 45,567 to 47,200. As a result, the negative non-commercial net position was -19,746 against -17,695 a week earlier, which indicates that the sellers of the British pound retains control and also shows their slight advantage in the current situation. Lack of clarity on the trade deal, together with the lockdown of the British economy in November, clearly does not add optimism and confidence to buyers of the pound.

Indicator signals:

Moving averages

Trading is carried out just above the 30 and 50 moving averages, which indicates the likelihood of continued bullish momentum.

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

Bollinger Bands

A breakout of the upper border of the indicator in the 1.3415 area will lead to a new wave of the pound's growth. In case the pair falls, support will be provided by the lower border at 1.3318.

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) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial speculative traders, 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.
  • Total non-commercial net position is the difference between short and long positions of non-commercial traders.
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