GBP/USD: plan for the European session on January 19. COT reports (analysis of deals). Pound is bought at every opportunity.

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

Yesterday, several signals to sell the pound were created at once during the first half of the day. I marked the breakout and the 1.3567 level was tested from the bottom up, which resulted in creating a convenient entry point for short positions. Immediately after that, the pound fell to the first target (1.3539), bringing around 30 points of profit. After some time, the bears achieved a breakout and the 1.3539 level was also tested from the bottom up, which results in creating another entry point to short positions. However, in this case, there was no major fall, and after a 20-point decline, the bulls returned the pound to the 1.3539 level. The technical picture was revised in the afternoon, but to my regret, there were no signals to enter the market. The only moment is a breakout and getting the pair to settle above 1.3557, however, this level was not tested from top to bottom, which forced me to miss this entry point.

Before examining the technical picture of the pound, let's take a look at what happened in the futures market. The demand for the pound continues to gradually increase as it decreases. The Commitment of Traders (COT) report for January 12 recorded an increase in both long and short positions, but there were more of the first ones, which caused the delta to increase. Long non-commercial positions increased from 35,526 to 47,935. At the same time, short non-commercial positions increased from 31,861 to 34,993. We can see that sellers turned out to be much less than new buyers. As a result, the non-commercial net position rose to 12,942 against 3,665 a week earlier. All this suggests that traders continue to bet on the strengthening of the pound, even in the face of the new Covid-19 strain, for which there is no vaccine yet. The demand for the pound is limited by quarantine measures in the UK, which will sooner or later be canceled after the infection situation stabilizes. The Bank of England's recent refusal to introduce negative interest rates and the pound's decline earlier this year have brought many large medium-term buyers back into the market, expecting a continuation of the bull market this spring.

As for the technical picture of the pair, the pound is still in demand in today's Asian session, which may result in a new upward movement, however, the bulls need to work very hard for this. A breakout and consolidation above resistance (1.3611) with a test of this level from top to bottom creates a good entry point for long positions. As an example, we can take yesterday's trade, after surpassing resistance (1.3557), however, this level should be tested from the other side. In this case, we can count on the larger upward trend to take the quote to the 1.3658 (high) and expect an update of the annual resistance (1.3701) in the long term, where I recommend taking profits. If the GBP/USD is under pressure in the first half of the day, then buyers must maintain control over the 1.3571 level. Forming a false breakout there will be a signal to open long positions in hopes for the pound to recover in the short term. You can open long positions immediately on a rebound after testing yesterday's low at 1.3531, counting on an upward correction of 30-40 points within the day.

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

The task is quite difficult for the bears. Forming a false breakout in the resistance area of 1.3611 will return pressure to the pair and result in its succeeding decline. A more important goal is a breakout and being able to settle below support at 1.3571, where the 30-day moving average passes, which is already playing on the side of pound buyers. In general, take note that trading is carried out within the moving averages, which indicates the balance of buyers and sellers. Testing the 1.3571 level from the bottom up creates a good signal to open short positions in GBP/USD, in order to pull it down to a low of 1.3531, where I recommend taking profits. We can finally speak about bringing back the downward trend when the quote has finally surpassed 1.3531, which will open a direct road to the low of 1.3480. If the bulls manage to regain the 1.3611 level in the morning, then it is better not to rush with short positions. The optimal scenario for selling the pound is when the 1.3658 high has been updated. I also recommend opening short positions immediately on a rebound in the resistance area of 1.3701, counting on a downward correction of 30-35 points within the day.

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Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market.

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 1.3625 will lead to a new wave of growth for the pound. A breakout of the average border of the indicator in the 1.3571 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.
  • Non-commercial short 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.
The material has been provided by InstaForex Company - www.instaforex.com

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