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22.04.2021 03:46 PM
GBP/USD: plan for the US session on April 22 (analysis of morning trades)

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

In my morning forecast, I paid attention to the level of 1.3944 and recommended making a decision based on it. Let's look at the 5-minute chart and figure out the entry points. By analogy with yesterday, the bears again achieved the formation of a false breakout at the level of 1.3944, which led to a good entry point into short positions. As a result, there was a downward movement to the target level of 1.3892, where I recommended taking the profits. The profit was about 50 points. Then, from the level of 1.3892, it was possible to observe the formation of a signal to open long positions, all according to the same scheme with a false breakdown. As a result: the upward movement was 25 points, and then the bears returned the market under their control, achieving a breakdown of 1.3892.

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In the second half of the day, buyers need to focus on the level of 1.3892, as their primary task will be to return the pair and close the day above this range. Only this will stop the bear market that we have seen since the middle of the week. A test of the level of 1.3892 from top to bottom will lead to the formation of a signal to buy the pound. In this scenario, you can count on the recovery of GBP/USD to the morning highs of 1.3944, where I recommend taking the profits. In the event of a further decline in the pair, it is best to postpone purchases until the test of a larger minimum of 1.3838, from which you can open long positions immediately for a rebound in the expectation of an upward correction of the pair of 25-30 points within the day.

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

Sellers achieved their goal and managed to protect the resistance of 1.3944, which eventually dumped GBP/USD in the support area of 1.3892. After some time, the breakdown of this level also took place. The main task of the bears for the second half of the day is now to maintain control over this range. A test of this area from the bottom up will lead to forming a new signal to open short positions in the expectation of a decline in the pound to a large minimum of 1.3838, where I recommend taking the profits. A breakout of this range will completely cancel out the bull market observed earlier this week. In the scenario of the pound's growth during the US session above the resistance of 1.3892, it is best not to rush with sales: you can only open short positions for a rebound from the level of 1.3944, counting on a downward correction of 25-30 points within the day.

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Let me remind you that the COT reports (Commitment of Traders) for April 13 recorded an increase in both long and short positions, while the total non-commercial net position increased, which indicates a higher activity of buyers of the pound. The good fundamental data that has recently been released on the UK economy proves a fairly high probability of strong economic growth in the 2nd quarter of this year, which will continue to contribute to the growth of the British pound in the medium term. The Bank of England has long been talking about how to proceed with a stimulating monetary policy since as the economy grows, there will be additional problems with inflation. The pound's growth earlier this week once again proves its attractiveness to major players, and most likely, the bull market will only gain momentum by the summer of this year. The COT report shows that long non-profit positions rose from 45,270 to the level of 52,851. Simultaneously, the short non-profit rose from the level of 25,219 to the level of 27,261, bringing the non-profit net position up to the level of 25,590 from the level of 19,951 a week earlier. The weekly closing price, on the contrary, fell to 1.3753 from 1.3913.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily averages, which indicates that the pressure on the pair remains.

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

If the pair grows, the upper limit of the indicator in the area of 1.3945 will act as a 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.
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