27.10.202114:01 Forex Analysis & Reviews: GBP/USD: the plan for the American session on October 27 (analysis of morning deals). The sellers of the pound have failed the next support of 1.3735 and are ready to defend it

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

In the first half of the day, one signal was formed to buy the pound, but it did not bring profit. Let's look at the 5-minute chart and figure out what happened. The formation of a false breakdown in the area of 1.3747 formed a good entry point into long positions to restore the pound and slow down the downward trend, but this was not enough. After a slight increase, a repeated test of 1.3747 took place and then a breakdown. The sharp fall of the pound to the area of 1.3711 was without a reverse correction to 1.3747, so I could not get a convenient entry point into short positions. The technical picture for the second half of the day has completely changed.

The whole focus has now shifted to reports on the American economy. If the data on the change in the volume of orders for long-term goods in the United States turns out to be worse than economists' forecasts, the bulls will try to return the resistance of 1.3735, without which it is unlikely to count on an upward correction for the pound in the afternoon. If the pair falls against the background of strong fundamental data for the United States, the best option for opening long positions will be to protect the support of 1.3706. Only the formation of a false breakdown there during the American session will lead to the formation of a good entry point into long positions. At the same time, as noted above, a breakthrough of 1.3735 will be no less important. It will lead to the demolition of several speculative stop orders of sellers counting on a further downward correction of the pair this week. The reverse test of the 1.3735 level from top to bottom will allow you to get to the maximum of 1.3777. A more distant target will be the 1.3827 area, where I recommend fixing the profits. In the scenario of the absence of active actions on the part of the bulls in the area of 1.3706, the best option to buy the pound will be a test of the next support of 1.3676. However, I advise you to open long positions there only after a false breakdown. You can watch GBP/USD purchases immediately for a rebound only from the minimum of 1.3632, or even lower - from the support of 1.3589, counting on a correction of 25-30 points within a day.

Exchange Rates 27.10.2021 analysis

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

Sellers have everything under control, and to consolidate the morning victory, you just need to protect the resistance of 1.3735 – which will not be so easy to do. Only the formation of a false breakdown there, together with strong data on changes in the volume of orders for long-term goods and the balance of US foreign trade - all this will return real pressure on GBP/USD and form an excellent entry point into short positions in the continuation of the bearish trend. The bears' next target will be the 1.3706 level. Only a breakout and a reverse test from the bottom up of this area will give a signal to open new short positions, counting on the pair's decline to the area of 1.3676 and 1.3632, where I recommend fixing the profits. In the case of a rise in the pound in the afternoon and the absence of bear activity in the 1.3735 area, it is best not to rush to sell. I advise you to wait for the formation of a false breakdown in the area of the next resistance of 1.3777, above which the moving averages are playing on the sellers' side. I advise selling the pound immediately for a rebound only from a larger resistance of 1.3827, counting on the pair's rebound down by 20-25 points inside the day.

Exchange Rates 27.10.2021 analysis

The COT reports (Commitment of Traders) for October 19 recorded a reduction in short and an increase in long positions, which reflects the upward trend in the pound observed in the middle of this month. It led to the return of the net position of a positive value. Speeches and statements by representatives of the Bank of England that it is necessary to take inflationary pressure more seriously also add confidence to buyers of the pound. Last week's speech by the Governor of the Bank of England, Andrew Bailey, was positively received in the market. He once again repeated his position on changing monetary policy. However, a slight slowdown in monthly and annual inflation growth in the UK limited the upward potential of the pair in the middle of the week, which led to its locking in a side channel. I advise you to count on the further strengthening of the pound and take advantage of any decline in the short term, which may form in the case of weak fundamental statistics. The COT report indicates that long non-commercial positions rose from the level of 46,794 to the level of 49,112, while short non-commercial positions fell from the level of 58,773 to the level of 47,497. It led to a change in the non-commercial net position from a negative value to a positive one. The delta was 1,615, against -11,979 a week earlier. The closing price of GBP/USD increased significantly: from 1.3591 to 1.3735.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates a further decline in the pound on an intraday trend.

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

In case of growth, the average border of the indicator in the area of 1.3760 will act as resistance.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit 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 the 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.

Miroslaw Bawulski,
Analytical expert of InstaForex
© 2007-2022
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