GBP / USD: plan for the European session on December 10. COT reports. Failed meeting between Johnson and Leyen. Pound bulls

To open long positions in the GBP / USD pair, you need:

The meeting of UK Prime Minister Boris Johnson and European Commission President Ursuala von der Leyen yesterday afternoon turned out unsuccessful, so pressure returned in the British pound. Therefore, short positions from 1.3483 worked out, however, it did not manage to produce specific signals for entering the market, since the quote was short by 5 pips from reaching the target level. The M5 chart clearly shows how the pair stopped at 1.3480, after which it reversed and moved down. But if you did not have time to enter sales from 1.3483, then it could be done after a return and consolidation below 1.3433. The test of this level from the bottom up (which is highlighted in the chart) produced a good sell signal towards 1.3381, since buying from the level, immediately on the rebound, did not lead to the expected upward correction.

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At the moment, the technical picture has not changed, so the task of pound bulls is still to maintain control over the level of 1.3340. The sharp collapse of the pound after the news of an unsuccessful meeting between Johnson and Leyen was quickly won back by buyers who stayed in the market. Therefore, a false breakout at 1.3340 in the morning will be an excellent signal to open long positions, with the expectation of continued growth in the short term. The main target will be the breakout and consolidation above the resistance level of 1.3388, the test of which (from top to bottom) will form a convenient entry point for the continuation of growth towards 1.3437. Further targets will be the resistance levels 1.3489 and 1.3534, but they will only be available when there is good news on the Brexit agreement. In case of low activity in 1.3340, do not rush to buy and instead wait for a downward correction to the area of 1.3290. There, you can try to get ahold of the market, in the expectation of a 20-30 pip correction within the day. A larger support level will be 1.3246, where you can also buy GBP / USD immediately on a rebound, counting on a correction of about 20-30 pips.

To open short positions in the GBP / USD pair, you need:

Several important economic reports will be published from the UK today. In the morning, data on UK GDP and industrial production will be released, which, if came out with negative figures, the initial target of the bears will be to protect the level of 1.3388, as a false breakout around it will return pressure on the pound and lead to a new low at 1.3340. Their next target will be the breakout and consolidation below 1.3340, the test of which (from the bottom up) will form a good sell signal towards 1.3290 and 1.3246. Bad news on the trade agreement will lead to a larger plunge to 1.3194 and 1.3114, but if the bulls manage to beat off the level 1.3388, then it is better not to rush with short positions. Nonetheless, the best scenario for short positions is the unsuccessful consolidation above 1.3437. Here, the pound may be sold from 1.3489,

Going back to the trade agreement, the UK and the EU agreed to continue their negotiations, and the next deadline is set for December 13 this year.

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The Commitment of Traders (COT) report for December 1 indicates significant interest in the British pound, as many traders expected to reach an agreement on Brexit. Long non-commercial positions rose from 30,838 to 37,087, while at the same time, short non-commercial positions decreased from 47,968 to 44,986. As a result, the negative non-commercial net position was -7,899, against its -17,130 value a week earlier. All this points to the strong control of pound bears in the market, as well as in their preponderance in the current situation. However, the market is beginning to gradually return to risks, and reaching a trade agreement will help this.

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Indicator signals:

Moving averages

Trading is carried out just below the 30 and 50-day moving averages, which indicates an attempt by the bears to renew pressure on the British pound.

Note: The period and prices of the moving averages mentioned above are from the hourly chart (H1) and differs from the daily moving averages in the daily chart (D1).

Bollinger Bands

A breakout in the level of 1.3390 (average border of the indicator) will lead to an upward move in the British pound. But in case of a decline, the support level will be the lower border of the indicator, which is 1.3330.

Description of indicators

  • 50-day moving average - determines the current trend by smoothing volatility and noise. Marked in yellow on the chart.
  • 30-day moving average - determines the current trend by smoothing volatility and noise. Marked in green on the chart.
  • MACD line (Moving Average Convergence / Divergence) - 12 EMA, 26 EMA, 9 SMA.
  • Bollinger Bands - 20-day
  • 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 positions of non-commercial traders.
  • Non-commercial short positions represent the total short positions of non-commercial traders.
  • 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