GBP/USD: plan for the European session on September 23. COT reports. Excellent entry points for pound buyers and sellers.

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

Some pretty good signals to enter the market appeared yesterday, especially in the afternoon. And if we missed the sell positions during the European session, then we managed to compensate for everything. Let's figure it out. If you look at the 5-minute chart, you will see that the first buy positions rebounded from the 1.2725 support, and then, after returning to the resistance level of 1.2777, I advised you to wait until this level is tested from the top down and buy the pound there, which happened... As a result, we saw the pair sharply rise to the resistance of 1.2867, which is about 90 points of profit, from where I advised selling GBP/USD immediately on a rebound, which happened. The bears managed to gain a foothold below support at 1.2777 in the afternoon, forming an excellent entry point to short positions from it, which caused the pound to tumble down to a low of 1.2725, where everything ended.

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Bulls currently need to protect this area and only good data on activity in the service sector of the UK and the manufacturing sector will be able to provide the necessary support for the pair. Forming a false breakout at the 1.2714 level will be a signal to open long positions while expecting an upward correction to the resistance area of 1.2782, where the moving averages pass, thereby limiting further growth. Settling above 1.2782 will be a signal to buy GBP/USD with the main goal of moving to yesterday's high in the 1.2863 area, which is where I recommend taking profit. In case the pair falls below the 1.2714 level, and this is more likely, it is best not to rush to buy the pound, but wait until the next low of 1.2645 is updated, or buy GBP/USD even lower, immediately on a rebound from support at 1.2585, counting on a correction of 30- 40 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for September 15 showed a reduction in long positions and a large increase in short positions, which indicates market expectations and a high possibility that the pound will fall in the long term, which is probably due to uncertainty regarding the conclusion of the Brexit trade deal. And if last week, it was possible to say that the downward momentum may start to gradually slow down, which the market showed us, now the situation is on the side of the pound sellers once again and the pair may succeedingly fall. Short non-commercial positions increased from 33,860 to 41,508 during the reporting week. Long non-commercial positions decreased from 46,590 to 43,801. As a result, the non-commercial net position sharply fell to 2,293, against 12,730, a week earlier.

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

Bank of England Governor Andrew Bailey said that the likelihood of introducing negative interest rates is becoming quite high. This statement caused the pound to fall against the US dollar. There are also problems with Brexit and the growth of coronavirus infections. In general, everything plays on the side of the pound sellers. We need weak economic data today, especially on activity in the UK services sector, which will lead to a breakout of support at 1.2714, settling below which will open a direct way for the pound to a low of 1.2645, and a distant target will be the 1.2585 area, which is where I recommend taking profit. In the event of an upward correction in GBP/USD, all on the same PMI reports, I recommend not to rush to sell, but to wait for a false breakout to form in the resistance area of 1.2782, where the moving averages also pass. It is possible to open short positions immediately on a rebound but only from a larger resistance in the 1.2782 area, counting on a correction of 30-40 points within the day. Major sellers of the British pound were very aggressive in that area yesterday.

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Indicator signals:

Moving averages

Trading is underway below 30 and 50 moving averages, indicating a renewed bearish 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 breakout of the lower boundary of the indicator in the 1.2714 area will lead to a new wave of decline for the pound. Growth will be limited by the upper level of the indicator in the 1.2795 area.

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
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