GBP/USD: plan for the European session on December 23. COT reports. Bears actively defend themselves, trying to build a new

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

Yesterday, a lot of good signals appeared, both to buy and sell the British pound. Let's take a look at the chart and break down all the entry points. You can clearly see how the buyers tried to gain a foothold above the resistance of 1.3434 in the first half of the day, but nothing happened. The data on the UK GDP for the third quarter contributed to the pound's growth, however, the pair did not surpass 1.3434, which resulted in creating a sell signal. Testing the 1.3434 level from the bottom up caused the pound to fall by 70 points, and so it reached the support area of 1.3362. I advised you to open long positions there, which caused GBP/USD to return to a resistance of 1.3434. In my afternoon forecast, I advised you to act in exactly the same way as you did during the European session. As a result, another false breakout at 1.3434 and a sell signal, which pushes the pound to the support of 1.3359, afterwards a breakout. Getting the pair to settle below and updating the 1.3359 level, similar to morning sales, creates another entry point for short positions, afterwards the pound fell by another 50 points.

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Despite the extremely high volatility from yesterday, buyers must still maintain control over the 1.3367 level. Forming a false breakout there will be a signal to open long positions in hopes for GBP/USD to recover in the short term towards the resistance of 1.3445. The main goal is to settle above this range. Testing this level from top to bottom creates an additional entry point into long positions in order to reach a high of 1.3525, where I recommend taking profits. The succeeding target will still be resistances at 1.3617 and 1.3690, but they will be available only if we receive good news on the Brexit agreement. In case bulls are not active in the support area of 1.3367, as it was yesterday afternoon, when buyers failed to defend the 1.3367 level after testing it for the second time, then it is best not to rush to buy, but wait until the 1.3290 low has been updated. However, I recommend opening long positions from this level only after forming a false breakout. A larger support area is seen around 1.3193, where you can buy GBP/USD immediately on a rebound, counting on a correction of 35-40 points.

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

Bears have nothing to focus on this morning, so trading will be backed by rumors and talk around a trade deal that has no news yet. Forming a false breakout in the resistance area of 1.3445, similar to yesterday's sales, will return pressure to the pair and result in the pound's decline and a test of support at 1.3367, on which a lot depends at the moment. Surpassing this level and testing it from the bottom up creates a good signal to open short positions to sustain the downward trend in order for it to reach lows of 1.3290 and 1.3193, where we observed a strong demand at the beginning of the week. Only bad news on the trade agreement can plunge GBP/USD to a low of 1.3114. If the bulls manage to defend the 1.3367 level and surpass 1.3445. I recommend opening short positions immediately on a rebound from the high of 1.3525, counting on a downward correction of 30-35 points within the day.

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The Commitment of Traders (COT) reports for December 15, there is a decrease in interest in the British pound for both buyers and sellers. Long non-commercial positions decreased from 39,344 to 35,128. At the same time, short non-commercial positions decreased from 33,634 to 31,060. As a result, the non-commercial net position, although it remained positive, dropped to 4,068, against 5,710 versus a week earlier. All this suggests that traders are taking a wait-and-see attitude, although a small preponderance of buyers, even in the current situation, continues to be observed. Given that the UK has imposed tough quarantine measures due to a new strain of coronavirus that has gotten out of control and for which there is no vaccine yet, then expecting the pound to strengthen further at the end of this year will not be the right decision. Only good news on Brexit can bring new players back into the market, betting on GBP/USD growth.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates some confusion in the market regarding the pair's succeeding direction.

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

If the pound rises, the upper border of the indicator at 1.3445 will act as a resistance. A breakout of the average border of the indicator in the 1.3367 area will increase the pressure on the pair.

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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