GBP/USD: plan for the European session on December 9. COT reports. X-day for Brexit trade deal. Hope for Boris Johnson and

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

Yesterday afternoon, there were a huge number of signals to enter the market. There were both profitable and unprofitable trades. Let's quickly go over them. If you recall yesterday's afternoon forecast and look at the 5-minute chart, you will see that testing the 1.3290 level caused the pound to rise to the resistance area of 1.3381. The movement was over 90 points. Then the bears managed to defend the 1.3381 area, but I failed to wait for a good sell signal from there. But after returning to the support area of 1.3340, I did buy, but they brought losses, and then this level was overcome and the pound fell. After that, it was necessary to sell the pound, which happened. Testing the 1.3340 area from the bottom up produced an excellent entry point for short positions, which caused the pound to fall to the 1.3290 support area. By the end of the US session, the bulls managed to form a signal to buy the pound from the 1.3340 level (a similar entry that brought losses). This signal turned out to be more profitable, resulting in an increase of about 35 points.

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The technical picture has not changed at the moment, buyers must maintain control over the 1.3340 level. Forming a false breakout there in the first half of the day will be an excellent signal to open long positions in hopes for the pound to rise in the short term. The main goal is for a breakout and getting the pair to settle above the resistance of 1.3381, testing it from top to bottom, similar to yesterday's purchases, produces a convenient entry point for sustaining the pound's growth, while also expecting it to reach a high of 1.3433, where I recommend taking profits. The next targets are resistances 1.3483 and 1.3534, but they will be available only if we receive good news about the outcome of the Brexit negotiations. In case bulls are not active in the support area of 1.3340, it is best not to rush to buy, but wait for a downward correction to the area of a low of 1.3290, where you can try to catch hold of the market, counting on a 20-30 point correction within the day. A larger support level remains at 1.3246, where you can also buy GBP/USD immediately on a rebound, counting on a correction of 20-30 points.

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

Pound sellers retreated from the market yesterday after news broke that British Prime Minister Boris Johnson had canceled the Internal Market Bill that violated earlier agreements with the EU. This caused the pound to rise and it returned to the resistance area of 1.3381 in the afternoon. The initial goal is to protect this range, where forming a false breakout will bring pressure back on the pair and lead to a renewal of the 1.3340 low. The next goal will be a breakout and getting the pair to settle below 1.3340. Testing this level from the bottom up produces a good signal to sell the pound in hopes for it to fall to the 1.3290 and 1.3246 areas, where I recommend taking profits. Bad news on the trade deal can pull down GBP/USD around lows of 1.3194 and 1.3114. If the bulls manage to regain the 1.3381 level, then it is better not to rush with short positions. The optimal scenario for selling the pound is when it fails to settle above 1.3433. I recommend opening short positions immediately on a rebound from a high in the 1.3483 area, counting on a downward correction of 25-30 points within the day. Since we will not receive any news regarding the UK economy today, focus will shift to Brexit.

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The Commitment of Traders (COT) reports for November 24 indicates significant interest in the pound, as many traders hoped that the Brexit deal would be finalized. Long non-commercial positions rose from 30,838 to 37,087. 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 -17,130 a week earlier. This indicates that sellers of the British pound retain control and it also shows their slight advantage in the current situation, but the market is beginning to gradually come back to risks, and reaching a trade deal will help it in this.

Indicator signals:

Moving averages

Trading is carried out just above 30 and 50 moving averages, which indicates the bulls' attempt to restore the pound's growth.

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 daily D1 chart.

Bollinger Bands

A breakout of the upper border of the indicator around 1.3390 will cause the pound to rise. In the event of a decline, support will be provided by the lower border of the indicator at 1.3315.

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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