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16.07.202008:22 GBP/USD: plan for the European session on July 16 (analysis of yesterday's trade). Consumer pressure gradually weakens, sellers seize the initiative. COT reports. Bears aim for breakthrough 1.2549

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

Good data on the growth of inflation in the UK did not keep the market in good shape for too long, and after a good buy signal formed above the level of 1.2615, near the middle of the US session, the bears returned the pair to this range again, and achieved its breakout from the top down. If you look at the 5-minute chart and remember my forecast for yesterday afternoon, you would recall that I paid attention to a signal to buy the pound in the level of 1.2615, which brought about 30-35 points. The return and consolidation below the level of 1.2615 led to forming a sell signal for the pound, which pushed the pair to the support area of 1.2549. The technical picture has slightly changed at the moment. Today, the focus will shift to data on the UK labor market and in the event of bad reports, the pressure on the pound will resume. Bulls need to protect the support of 1.2549 and form a false breakout there, since we can expect growth to the resistance area of 1.2593 and its breakout under these conditions, which then forms another signal to open long positions in order to break the weekly resistance level in the area of 1.2646. The 1.2742 area will be the long-term goal, where I recommend taking profits. In case buyers are not active and a fall below the level of 1.2549 occurs, it is best to postpone long positions until the weekly support of 1.2496 has been updated or buy GBP/USD immediately on a rebound from the low of 1.2439 based on a correction of 30-40 points within the day. The COT report for July 7 showed that there was an increase in short non-commercial positions from the level of 55,414 to the level of 56,300 during the week. Long non-commercial positions rose from the level of 34,424 to the level of 39,892. As a result, the non-commercial net position decreased its negative value to -16,408, against -20,990, which indicates that the market is still under pressure after an unsuccessful attempt by the bulls to continue the upward trend, but the picture is gradually shifting to the neutral side.

Exchange Rates 16.07.2020 analysis

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

Sellers managed to recover in the US session on Wednesday and formed a new resistance of 1.2593, which is the focus this morning. In case the UK labor market data produces good results, the bears will have to protect this range and form a false breakout there, which will be a signal to open short positions while expecting a breakthrough and consolidation under the support of 1.2549, which is now being traded. If the reports come out worse than economists' forecasts, the breakout of 1.2549 will also be a signal to sell GBP/USD in the expectation of a further bearish market to a low of 1.2496. The 1.2439 area is a more distant goal, where I recommend taking profits. If sellers do not have enough strength to protect the level of 1.2593 in the first half of the day, it is best to postpone sales to the resistance of 1.2646, but I recommend opening short positions immediately on a rebound from the high of 1.2742 , counting on a correction of 30-40 points.

Exchange Rates 16.07.2020 analysis

Indicator signals:

Moving averages

Trading is just below the 30 and 50 moving averages, which indicates the end of the active short-term growth phase of the British pound.

Note: the period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break in the lower border of the indicator at 1.2549 will increase the pressure on the pair. Growth will be limited by the upper level of the indicator in the area of 1.2640.

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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial traders are speculators, 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.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Performed by Ruben Watson,
Analytical expert
InstaForex Group © 2007-2020
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