In my morning forecast, I mentioned the level of 1.2395 and recommended making trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at this level provided an excellent buying signal, which shows a profit of more than 70 pips at the time of writing this article. The technical picture has slightly changed for the second half of the day.
To open long positions on GBP/USD, the following is required:
I will be waiting for the figures on the trade balance, as well as the export and import volume of the United States. Good indicators may lead to a slight decrease in GBP/USD, which would be a great opportunity to increase long positions to continue the upward trend. I prefer to act after a new support level is established at 1.2432, formed during today's session, below which the moving averages playing on the buyer's side are located. The formation of a false breakout there will provide a buying signal with the prospect of an increase in the pair towards the resistance level at 1.2463. Only a breakthrough and a reverse test from top to bottom of this range will give an additional signal to open long positions, strengthening the presence of bulls in the market, with a target of 1.2490, allowing the return of the upward trend. The ultimate target will be the area of 1.2518, where I will take profits.
In a pound decline towards 1.2432 and a lack of buyer activity, pressure on the pair will return. In that case, I will postpone market entry until the minimum of 1.2395, where the pound was already bought once today. I will open long positions based on the same principles as the false breakout mentioned above. I plan to buy GBP/USD immediately on a rebound only from 1.2369, with a target correction of 30-35 pips within the day.
To open short positions on GBP/USD, the following is required:
Sellers attempted to re-enter the market but failed to break yesterday's lows. Considering the significant pound growth and the absence of any correction, I prefer to act only around the new resistance level at 1.2463. I will consider short positions there only after a false breakout is formed since it will allow a downward movement toward the new support at 1.2432. A breakthrough and a reverse test from the bottom to the top of this range will revert the market to a bearish character, nullifying the entire growth and providing a signal to open short positions with a decline towards 1.2395. The ultimate target remains the minimum at 1.2369, where I will take profits.
In the case of further GBP/USD growth and a lack of activity at 1.2463 in the second half of the day, sellers' stop orders will come into play, forming a new bullish market. In that case, I will postpone sales until the resistance at 1.2490 is tested. A false breakout there will be the entry point for short positions. I will plan to sell GBP/USD immediately on a rebound from 1.2518 but with the expectation of a pair correction downward by 30-35 pips within the day.
In the COT (Commitment of Traders) report for May 30th, there was a decrease in short positions and an increase in long positions. The pound experienced a significant decline, but good statistics released last week helped halt the decline and partially compensate for the losses in May. However, the expectation of the Federal Reserve continuing to raise interest rates limits the upward potential of the pair. Despite the Bank of England's pause on monetary policy in June, an overheated labor market will only allow the committee to stop the cycle of tightening monetary policy for a short time. Faced with further uncertainty from the Bank of England regarding monetary policy, there will be clear pressure on the British pound. The latest COT report states that non-commercial short positions decreased by 529 to 57,085, while non-commercial long positions increased by 1,117 to 70,320. This led to an increase in the non-commercial net position to 13,235 compared to 11,059 the previous week. The weekly price decreased to 1.2398 from 1.2425.
Trading is conducted above the 30 and 50-day moving averages, indicating further pair growth.
Note: The period and prices of the moving averages considered by the author are on the hourly chart H1 and differ from the general definition of classical daily moving averages on the daily chart D1.
In case of a decrease, the lower boundary of the indicator, around 1.2395, will act as support.
Description of indicators:
• Moving average: Determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.
• Moving average: Determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence): Fast EMA period 12, Slow EMA period 26, SMA period 9.
• Bollinger Bands: Period 20.
• Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
• Non-commercial long positions: Represents non-commercial traders' total long open positions.
• Non-commercial short positions: Represents non-commercial traders' total short open positions.
kii• Non-commercial net position: The difference between short and long positions of non-commercial traders.