In my morning forecast, I paid attention to the 1.2241 level and recommended making decisions from it. Let's look at the 5-minute chart and figure out what happened there. The decline and the formation of a false breakout pair at this level after a disappointing report on the decline in retail sales in the UK led to an excellent entry point into long positions. As a result, the pair grew by more than 60 points, but we did not reach the target level of 1.2317. For the second half of the day, the technical picture, as well as the strategy, has not changed at all. And what were the entry points for the euro?
To open long positions on GBP/USD, you need:
The pound came under pressure after data from the Office for National Statistics of the United Kingdom, which reported that retail sales fell by 0.5% in May compared to April. Economists had expected a 0.7% decline. Sales excluding motor fuel fell 0.7%. The index suffered the most due to a 1.6% reduction in food sales, especially in supermarkets in the country. During the American session, data on the consumer expectations index and the consumer sentiment index from the University of Michigan are released today, which are unlikely to provide significant support to the dollar. For this reason, I expect the pair to remain in the side channel with the prospect of updating the resistance at 1.2317. In case of a return of pressure on the pound after the data, the bulls will try to protect 1.2241. Only the formation of a false breakdown there, by analogy with what I discussed above, will give a signal to open new long positions in the expectation of growth to the nearest level of 1.2317. In the morning forecast, I said that this level is critically important for bulls, since, having returned it under control, it will be possible to count on the resumption of the bull market formed on June 14. A breakout and a top-down test of 1.2317 will give a buy signal based on the update of 1.2400. A similar breakthrough at this level will lead to another entry point into long positions with the prospect of reaching 1.2452, where I recommend fixing the profits. A more distant target will be the 1.2484 area. If GBP/USD falls and there are no buyers at 1.2241 in the afternoon, the pressure on the pair will increase. In this scenario, I advise you to open new long positions only on a false breakout from the lower border of the side channel 1.2171. You can buy GBP/USD immediately for a rebound from 1.2102, or even lower – around 1.2030 with the aim of correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
The bears did everything possible to return to the market, but they failed to break below 1.2241 in the first half of the day. Most likely, the emphasis will be placed on this level during the American session. No less important task will be the protection of 1.2317. Growth to this level may take place after weak data on sales in the US housing market, so only the formation of a false breakdown there will lead to the formation of the first sell signal with the prospect of a return to 1.2241. Its breakthrough will lead to a sell-off and a return of GBP/USD to the area of the lower border of the side channel. However, only a consolidation below 1.2241 and a reverse test from the bottom up will give an entry point into short positions. A more distant target will be the 1.2102 area, the test of which will testify to the defeat of buyers. With the option of GBP/USD growth and the absence of bears at 1.2317, we will only have to count on the nearest resistance of 1.2400. A false breakout at this level will give a good entry point into short positions in the expectation of at least some downward correction. If there is no activity at 1.2400, another upward jerk may occur against the background of the demolition of stop orders of speculative sellers. In this case, I advise you to postpone short positions to 1.2452. But even there, I advise selling the pound only in case of a false breakdown, since going beyond this range will increase demand for GBP/USD. Short positions can be viewed immediately for a rebound from 1.2484, or even higher – from 1.2516, counting on the pair's rebound down by 30-35 points inside the day.
The COT report (Commitment of Traders) for June 14 recorded a reduction in both long and short positions, which led to a slight decrease in the negative delta. After the meeting of the Bank of England, at which it was announced that it would adhere to the previous plan to raise interest rates and combat high inflation, the pound strengthened its position, which will affect future COT reports. For sure, the big players are taking advantage of the moment and buying back the much cheaper pound, despite all the negative things that are happening with the UK economy right now. However, one should not rely too much on the pair's recovery in the near future, since the policy of the Federal Reserve System will seriously help the US dollar in the fight against risky assets. The COT report indicates that long non-commercial positions decreased by 5,275, to the level of 29,343, while short non-commercial positions decreased by 10,489, to the level of 94,939. This led to a decrease in the negative value of the non-commercial net position from the level of -70,810 to the level of -65,596. The weekly closing price decreased to 1.1991 against 1.2587.
Signals pf indicators:Moving averagesTrading is conducted around 30 and 50 daily moving averages, which indicates market uncertainty.Note. The period and prices of 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 BandsIn the case of growth, the average border of the indicator around 1.2310 will act as resistance. In the case of a decline, the lower limit of the indicator in the area of 1.2215 will act as support.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 use the futures market for speculative purposes and to 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.
