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27.01.202113:57 Forex Analyse & Reviews: GBP/USD: plan for the US session on January 27 (analysis of morning trades)

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

In the first half of the day, a signal was formed to sell the British pound. Let's look at the 5-minute chart and analyze the entry point. In its morning forecast, I paid attention to short positions on the pound in the formation of a false breakdown of what happened. The level of 1.3747 turned out to be "too tough" for the buyers of the pound, and an active attempt to continue the growth of GBP/USD failed. As a result, a false breakout of this level was formed, after which it was possible to open short positions. At the time of writing, the downward movement was about 25 points and the signal continues to operate.

Exchange Rates 27.01.2021 analysis

The technical picture has not changed in any way. In the second half of the day, the bulls need to think more seriously about how to overcome the next annual high in the area of 1.3747, as they failed to do so on the first attempt. A break and consolidation above this level, with its top-down test, forms another signal to open long positions in the continuation of the bull market that began yesterday in the morning after the UK labor market data. In this case, we can expect an update of the highs in the area of 1.3770 and 1.3805, where I recommend taking the profits. The more distant target will be the area of 1.3846, and this will be a great result by the end of the week. It is worth remembering that today we will have a meeting of the Federal Reserve System on interest rates in the United States, which will set the direction for the pair before the end of this week. In the case of a downward correction of the British pound, you can expect to buy after the formation of a false breakdown in the support area of 1.3707, below which the moving averages are playing on the side of buyers. If there is no activity, I recommend postponing long positions until the update of a larger minimum of 1.3672, from where you can buy GBP/USD immediately on the rebound to move up by 20-25 points within the day.

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

The bears have already achieved the formation of a false breakout in the resistance area of 1.3747, and as long as trading is conducted below this range, we can expect a further fall in the pound. Another unsuccessful consolidation above 1.3747 will only strengthen the sellers' positions. In this scenario, we can expect a decline in GBP/USD to the support area of 1.3707, however, it is possible to open short positions from there on the GBP/USD pair only after fixing below this range and testing it from the bottom up, which forms a good entry point in the expectation of resuming the downward correction. The initial target of the bears, in this case, will be the support of 1.3672. However, a more difficult task will be to update the area of 1.3637, where I recommend taking the profits. In the scenario of GBP/USD growth in the second half of the day above the resistance of 1.3747, it is best not to rush to sell but to wait for the update of the maximum of 1.3770, where you can open short positions with the aim of a small correction of 25-30 points within the day. The larger resistance area remains at the base of the 38th figure.

Exchange Rates 27.01.2021 analysis

Let me remind you that the COT reports (Commitment of Traders) for January 19 recorded a reduction in both long and short positions, which indicates a more cautious approach of traders to this trading instrument. Long non-commercial positions fell from 47,935 to 45,904. At the same time, non-commercial short positions fell from 34,993 to 32,199. It can be seen that the decline in short positions is much stronger than long ones. As a result, the non-profit net position increased and amounted to 13,705 against 12,942 a week earlier. And although traders are trying to take a more wait-and-see position in the area of annual highs, and this is a consequence of the fact that it is very difficult for the bulls to update them, the demand for the pound will still be quite high. As the quarantine measures are lifted, which were strengthened due to the new COVID-19 strain, the upward movement of the GBP/USD pair will be more active. The Bank of England's wait-and-see stance on changes in monetary policy also supports the British pound, and the new labor market support program, which was recently proposed by the UK Finance Minister, keeps investors fairly optimistic and confident in the medium-term strengthening of the pair.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, which indicates that the pound will continue to grow in the short term.

Note: The period and prices of the 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 of the upper limit of the indicator in the area of 1.3747 will lead to a new wave of growth. A break of the lower limit of the indicator in the area of 1.3720 will increase the pressure on the pair.

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.

Uitgevoerd door Miroslaw Bawulski,
Analytische expert
InstaForex Group © 2007-2021
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