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GBP/USD: plan for the European session on November 22. COT reports. Pound bulls are clinging with their last bit of strength.

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

The deterioration of the situation with the spread of coronavirus in the countries of the European Union has also led to the formation of pressure on the British pound, which has not been feeling very well lately. Against this background, there were enough signals to enter the market. Let's take a look at the 5-minute chart and sort them out. The British pound fell sharply against the US dollar in morning trading on Friday, but it was not possible to get a convenient entry point into short positions. News from the eurozone that Austria is closing for a lockdown, and Germany is going to do it – not the best end of the week for bulls. A breakthrough of 1.3466 occurred without a reverse test of this level from the bottom up, so I missed the entry point. But the formation of a false breakout at the 1.3419 level resulted in creating a good entry point into long positions. As a result, it was possible to observe the pound's return to the resistance area of 1.3464, which brought more than 40 points of profit. There, bears returned to the market again and managed to form a false breakout and an entry point into the short position.

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Today there are no fundamental statistics for the UK and most likely a lot will depend on the rate of spread of the coronavirus. If the situation worsens, the pressure on the pound will return. However, bulls still have the opportunity to regain control of the market and maintain an upward correction. To do this, it is necessary to protect the support of 1.3428, where the formation of a false breakout will be the first signal to open long positions in order to update 1.3471. Moving averages pass at this level, so it will not be so easy to get out of this range. A breakdown and a test of this area from top to bottom will open the way to a high of 1.3510, where I recommend taking profit. The 1.3560 level is a more distant target, but we are unlikely to reach it today without strong fundamental statistics. In case the pair falls in the first half of the day and the bulls are not active at 1.3428, the pressure on the pound may seriously increase. In this case, I advise you to open new long positions only after a false breakout in the area of 1.3398. You can watch long positions on GBP/USD immediately for a rebound from the low of 1.3365, or even lower - from the support of 1.3308, counting on a correction of 25-30 points within a day.

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

Bears do not have new arguments to regain the market's location yet, so they will wait for news on the situation with coronavirus in the EU countries. The best option for selling GBP/USD in the current conditions will be the formation of a false breakout at the 1.3471 level, where the moving averages are playing on the bears' side. This will lead to creating a new entry point into short positions, followed by a decline to the area of 1.3428, on which a lot depends today. A breakthrough of this range together with the reverse test from the bottom up - all this forms another signal to open new short positions in order to fall to the week's lows: 1.3398 and 1.3365, where I recommend taking profits. If the pair grows during the European session and there are no bears at the 1.3471 level, it is best to postpone short positions to a larger resistance of 1.3510. I advise you to open short positions immediately for a rebound from 1.3560, or even higher - from a new high in the area of 1.3605, counting on the pair's rebound down by 20-25 points within the day.

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I recommend for review:

The Commitment of Traders (COT) report as of November 9 logged an increase in short positions and a decrease in long ones, which led to a negative delta. Disappointing Q3 GDP results in the UK and a possible plunge in retail sales in Q4 amid a spike in inflation pushed the sterling down and exerted pressure on it. Another important factor for a bearish pound is the escalation of tension over the Northern Ireland protocol the British authorities plan to terminate in the near future. The European Union is preparing to introduce certain retaliatory measures. At the same time, inflation in the United States keeps rising, increasing the likelihood of earlier interest rate hikes, which provides support to the greenback. Nevertheless, I recommend sticking to the strategy of buying the pair after every large fall that is likely to occur amid uncertainty surrounding the central bank's monetary policy. According to the COT report, long non-commercial positions declined to 54,004 from 57,255 and short non-commercial positions increased to 66,097 from 42,208. The delta came at -12,093 versus 15,047 a week earlier. The weekly closing price dropped to 1.3563 from 1.3654 due to the Bank of England's stance on monetary policy.

Indicator signals:

Moving averages

Trading is carried out below the 30 and 50 moving averages, which indicates that the bears are trying to resume the downward trend.

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 breakthrough of the upper border in the 1.3470 area will lead to a new wave of growth in the pound. A break of the lower border of the indicator around 1.3420 will increase the pressure on the pound.

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