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11.06.202108:43 Forex Analysis & Reviews: GBP/USD: plan for the European session on June 11. COT reports. Bulls have done some serious work to protect the lower border of the channel and restore the pound

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

Yesterday several signals were formed to enter the market, which were quite profitable. Let's take a look at the 5 minute chart and break down the entry points.

In my morning forecast, I paid attention to the 1.4085 level and advised you to make a decision on entering the market. A decline and a breakthrough of the 1.4085 area, followed by its renewal from the bottom up, resulted in creating a good entry point to short positions in continuation of the trend that was observed before. However, the market did not go down, and after the 1.4085 level was "smeared", short positions had to be abandoned in favor of long positions, since a false breakout was formed.

Exchange Rates 11.06.2021 analysis

Before the US inflation report was published, there was no normal upward movement in the pound, but after the report was released, the pair jumped by around 60 points and rested against the resistance of 1.4147, which I talked about a lot in my afternoon forecast. Forming a false breakout there resulted in creating a signal to open short positions. The downward movement was about 30 points after which the market turned around and went upwards. The subsequent breakthrough and consolidation above the level of 1.4147 with a reverse test - all this resulted in creating a new entry point into long positions and had strengthened the pound by another 30 points.

Exchange Rates 11.06.2021 analysis

A huge amount of important data on the UK economy will be published today, which will set the direction for the market at the very beginning of the day. You need to pay attention to the monthly GDP growth in the UK, as well as the volume of industrial production and the activity of the service sector. Closer to noon, there will be speeches by representatives of the Bank of England: Governor Andrew Bailey and Jon Cunliffe. In case of bad reports, the initial task of the bulls for the European session will be to protect support at 1.4156 just below which the moving averages are, playing on the side of the bulls. Forming a false breakout there will be the first signal to open long positions with the expectation of recovery to the area of the upper border of the horizontal channel at 1.4196, in which the pair spent the whole week. A strong report on GDP and production will lead to a breakthrough and consolidation above the level of 1.4196. Its test from top to bottom generates a signal to open long positions in order to exit to the high of 1.4241, where I recommend taking profits. A more distant resistance level is seen in the area of 1.4310. If GBP/USD drops to the 1.4156 area and there is no buying activity there, it is best to postpone long positions until the 1.4121 low is renewed. I also recommend opening long positions immediately on a rebound from the level of 1.4086 with the aim of an upward correction of 20-25 points within the day. The 1.4086 level is the lower border of the weekly horizontal channel.To open short positions on GBP/USD, you need:The bears have a lot of problems now, especially considering what good fundamental data on the UK awaits us today. If the reports turn out to be better than economists' forecasts, the bear will need to think of a way to protect the resistance at 1.4196, which, in addition, acts as the upper border of the horizontal channel. Forming a false breakout there creates a signal to open short positions for the purpose of a downward correction to the area of intermediate support at 1.4156. A disappointing fundamental report on UK GDP will lead to a breakthrough of this level. Its reverse test from the bottom up creates a convenient entry point into short positions with the aim of falling to the area of the low of 1.4121, slightly above which the moving averages playing on the bulls side are. A breakthrough of this range will surely hit the bulls' stop orders, which will quickly push the pound to the area of the lower border of the horizontal channel at 1.4086, where I recommend taking profits. If the GBP/USD grows in the first half of the day and the bears are not active at 1.4196, I advise you to postpone short positions until the resistance test at 1.4241, where you can sell the pound immediately on a rebound, counting on a downward correction of 20-25 points within the day.

Exchange Rates 11.06.2021 analysis

The Commitment of Traders (COT) reports for June 1 showed a slight increase in long positions and a very large growth in short ones, which was evidence of a sharp fall in the pound. The statements of the Bank of England representatives no longer work, as market participants need concrete actions, not promises. Until they are present, it will be very difficult for the bulls to surpass new local highs. The risk of a later opening of the UK economy due to the spread of the Indian strain of the coronavirus also poses a number of disincentives for the bulls. However, as soon as the central bank starts to take inflation seriously and talk about changes in the volume of the asset purchase program, the demand for GBP/USD will immediately return. Therefore, the optimal scenario is buying everytime there is a good decline in the British pound against the US dollar. The COT report indicated that long non-commercial positions rose from 64,193 to 64,204, while short non-commercial positions rose much stronger from 33,534 to 40,079, which indicates the emergence of new bears in the market after a couple of regular local highs. As a result, the non-commercial net position decreased from the level of 30,659 to the level of 24,125. The closing price of the last week changed and amounted to 1.42270 against 1.41553.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bulls to go beyond the upper border of the horizontal channel.

Moving averages

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

Bollinger Bands

Growth will be limited by the upper level of the indicator around 1.4215. In case the pound falls, support will be provided by the lower border of the indicator at 1.4105.

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) Quick EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial 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 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,
Odborný analytik spoločnosti InstaForex
© 2007-2021
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