GBP/USD: plan for the European session on March 24. COT reports. Pound bulls held out to the end, but the bears were more

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

I paid attention to the 1.3775 level in the afternoon and advised you to act based on it. Let's take a look at the 5 minute chart and talk about which entry points were formed. I have repeatedly mentioned the fact that the 1.3775 level is very important for the bulls. Therefore, it was not surprising that when the bears failed to settle below this range, the bulls tried to regain control of 1.3775. I advised you to buy on the reverse test from top to bottom of this range, which is what happened. An excellent entry point was formed: as a result, the movement was more than 25 points. After that, there was another test at 1.3775 and again 25 points and it stopped. And the bears only managed to regain control over this support on the third retracement, which led to a new wave of the pair's downward movement and to the resumption of the downward trend, which can only be stopped by a miracle.

analytics605abb37d5fda.jpg

As for the trading deals in the first half of the day, after a breakout of 1.3820, it returned to this level, however, a couple of points were missing before it was tested from the bottom up. Therefore, those who did not have time to sell, or did not begin to do so, did the right thing. Who sold - got a profit of 40 points. Buying on the rebound from support at 1.3776 did not bring profit and it turns out that you only get zero, since I did not wait for the reverse sharp upward movement of the pound.

Bears are still in control of the market and the bulls need to do their best in preventing the pound from falling further. They can only get help from reports on activity in the manufacturing and service sectors in Great Britain, as well as quite important data on the consumer price index, which may affect the Bank of England's forecasts on monetary policy. The initial task is to protect support at 1.3718, which the pair came close to during the Asian session. Forming a false breakout there creates a signal to open long positions in hopes of an upward correction. The nearest target will be resistance at 1.3754, a breakthrough of which is also included in the bulls' main task for the first half of the day. A breakthrough and being able to settle above 1.3754, along with a test of this level from top to bottom creates an additional signal to buy the pound in hopes that it would reach a high like 1.37956, where I recommend taking profits. Moving averages that play on the side of sellers also pass there. If traders are not active in the support area of 1.3718, then it would be best to hold back from long positions until a low like 1.3683 has been tested, from where you can buy GBP/USD immediately on a rebound, counting on a correction of 30-35 points within the day. The next major support level is seen around 1.3645.

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

The initial task is to fall below support at 1.3718 and settle there, which they came close to during the Asian session. Testing this level from the bottom up will create a good signal to open short positions in order to continue the downward trend for the purpose of reaching a low like 1.3683. A breakthrough of this range, along with weak inflation data in the UK, will only increase pressure on GBP/USD, which will open a direct path to a low like 1.3645, where I recommend taking profits. If GBP/USD grows in the first half of the day, then the bears' task is to protect resistance at 1.3754. Forming a false breakout there creates a new entry point for short positions in order to continue the downward trend. If bears are not active in the resistance area of 1.3754, then it would be best not to rush to sell: you can open short positions immediately on a rebound from the 1.3796 high, counting on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.3848.

analytics605abb3f2cadd.jpg

The Commitment of Traders (COT) report for March 15 revealed a reduction in both short and long commercial positions. Once again, the closing of long positions became quite strong, which led to a reduction in the positive delta. The main problem for risky assets, which can be attributed to the pound, is still the growth in the yield of US bonds, which provides serious support to the dollar. However, in the medium term, buyers of the pound will certainly take advantage of this moment to enter the market at more attractive prices, since a good vaccination program will allow more active quarantine measures to be phased out. In the future, this will lead to a major growth in the economy, which will increase inflationary pressures and make the Bank of England seriously think about phasing out stimulus measures and raising interest rates. Expectations of such decisions will have a positive effect on the pound, which will lead to its growth. Long non-commercial positions declined from 61,271 to 55,190. At the same time, non-commercial short positions fell from 27,360 to 26,590, indicating a possible succeeding decline for the pair. As a result, the non-commercial net position fell to 28,600 from 33,911 a week earlier. The weekly closing price remained practically unchanged and reached 1.3898 against 1.3821. The observed downward correction in the pound will attract new buyers.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates a continuation of the downward trend for the pound.

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 lower border of the indicator in the area of 1.3715 will increase the pressure on the pair. If the pound rises, the upper border of the indicator at 1.3796 will act as a resistance.

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.
The material has been provided by InstaForex Company - www.instaforex.com

Pages