18.06.202113:45 Forex Analyse & Reviews: GBP/USD: plan for the US session on June 18 (analysis of morning trades).

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

In the first half of the day, there were quite many events on the pound, which I would like to talk about. Let's look at the 5-minute chart and figure out what happened. I was paying attention to the support of 1.3888 and the UK retail sales data. So, a bad report led to a breakdown of this level. However, the reverse test from the bottom up did not occur, so I missed the sales from 1.3888. Then the bulls began to actively win back the market and the divergence visible on the MACD indicator and successfully regained this area by testing it from top to bottom. It was a signal to open long positions. From a technical point of view, I did not change anything.

Exchange Rates 18.06.2021 analysis

As long as trading is conducted above the level of 1.3888, buyers will have a good chance of continuing the upward correction of the pair. The next formation of a false breakout at the level of 1.3888 forms an additional signal to open long positions to restore the GBP/USD to the resistance area of 1.3938. A breakout and consolidation above this level with a reverse test from top to bottom will open a direct road to the area of 1.3993, where the moving averages are playing on the side of the pound sellers. With the next decline in GBP/USD in the area of 1.3888 and the lack of activity of buyers, it is best to postpone long positions until the update of the minimum of 1.3839. You can also buy the pound immediately on a rebound from the level of 1.3799 with the aim of an upward correction of 20-25 points within the day.

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

The sellers' task has not changed. A repeated breakdown and consolidation below the support of 1.3888, as well as its test from the bottom up, will indicate the formation of a new entry point into short positions and will allow GBP/USD to get to new local lows of 1.3839 and 1.3799, where I recommend taking the profits. But a safer decision to sell the pound at the end of this week will be an upward correction of the pair in the afternoon to the resistance area of 1.3938. However, I advise you to open short positions only after the formation of a false breakout. If there is no activity on the part of sellers, I recommend postponing sales until the test of a larger area of 1.3993, where you can sell the pound immediately for a rebound in the expectation of a downward correction of 20-25 points within the day. In this range, there are also moving averages that play on the side of sellers.

Exchange Rates 18.06.2021 analysis

In the COT reports (Commitment of Traders) for June 8, a reduction in both long and short positions was recorded. However, this did not affect the positive delta negatively. On the contrary, it even increased due to a larger reduction in sellers' positions. It indicates the presence of a sufficiently large interest of buyers with each decline in the pound. The same type of statements by representatives of the Bank of England no longer work, and the market reacts rather weakly even to the speeches of Governor Andrew Bailey. Without real changes and adjustments to the bond-buying program by the central bank, it will be quite difficult for the British pound to get out of the side channel in which it has been for almost one month. An important point will be the full opening of the UK economy, which is scheduled for the 20th of this month. The spread of the Indian strain of coronavirus in the territory creates several obstacles to this, which affects the desire of investors to buy the British pound. The optimal scenario is to buy at every good decline in the British pound against the US dollar. The COT report shows that long non-profit positions fell from the level of 64,204 to 59,238, while short non-profit positions fell much more strongly from the level of 40,079 to the level of 31,524. As a result, the non-commercial net position increased from the level of 24,125 to the level of 27,714. The closing price of the previous week changed significantly and amounted to 1.41757 against 1.42270.

Signals of indicators:

Moving averages

Trading is below 30 and 50 daily averages, which indicates a continuation of the bear market.

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 lower limit of the indicator in the area of 1.3870 will lead to a new wave of falling of the pound. The growth will be limited by the upper level of the indicator in the area of 1.3945.

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 specific 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
© 2007-2021
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