In my morning forecast, I paid attention to several levels, but we never reached them. Let's look at the 5-minute chart and figure out what happened. The lack of statistics and low volatility of the pair - all this did not allow me to get to the levels I indicated, from which I was advised to make decisions. Accordingly, there were no entry points to the market. For the second half of the day, the technical picture has not changed in any way, nor has the strategy changed. And what were the entry points for the euro this morning?
To open long positions on GBP/USD, you need:
The focus will be on data on the number of people employed in the US non-agricultural sector - on the so-called Nonfarm payrolls report. The unemployment rate is unlikely to make a huge difference, even if it is reduced by one-tenth. If the number of new jobs turns out to be significantly worse than forecasts, and let me remind you, analysts already expect a serious reduction in May compared to April, the pressure on the dollar will increase. In this case, we will certainly see an update of the highs of last month. If the data indicate that the labor market is coping well with the tightening of monetary policy by the Federal Reserve and is not losing its growth rate yet, the pressure on the pound will return at the end of the week and we may see a strengthening of the US dollar. In the case of a decline in the pound, only the formation of a false breakdown at 1.2540, where the moving averages are, will lead to the first signal to open new long positions in the expectation of a resumption of the bullish trend. An equally important task for the bulls will be to consolidate above the large resistance of 1.2595, which must be returned - if buyers, of course, plan to maintain a bull market. It is possible to expect a sharper jerk of the pair, but only after fixing above this range with a reverse test from top to bottom, which will open the way to a maximum of 1.2655. A breakdown of this range will return GBP/USD to the resistance area: 1.2709 and 1.2755, where I recommend taking the profits. In case of a decline in the pound and the absence of buyers at 1.2540 in the afternoon, the pressure on the pair will only increase. This will allow us to reach 1.2500, which will call into question the further bullish trend for the pair. For this reason, I advise you not to rush purchasing. It is best to enter the market after a false breakdown at this level. I advise buying GBP/USD immediately for a rebound from 1.2460, or even lower - around 1.2411 with the aim of correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
As I said this morning, the bears have one last chance to get the market back under their control. To do this, it is necessary to protect the resistance of 1.2595, the test of which can take place in the case of weak statistics for the United States. Only the formation of a false breakdown there will give a signal to open short positions in the expectation of a downward correction of the pair to the area of 1.2540, where the moving averages are. An equally important task for sellers will be to consolidate below 1.2540. Closing the week below this range will surely lead to the pair hanging in the side channel with the prospect of gradually returning pressure on the pound from the major players. A breakthrough and a reverse test from the bottom up of 1.2540 will form an additional sell signal, allowing GBP/USD to return to the 1.2500 area, from which the pair's most active growth was observed yesterday. A breakout of this range will also open a direct road to the minimum of 1.2460, where I recommend fixing the profits. The longer-term target will be a minimum of 1.2411, which will completely cancel out the bull market. With the option of GBP/USD growth and lack of activity at 1.2595 in the afternoon, an upward jerk may occur against the background of the demolition of sellers' stop orders. In this case, I advise you to postpone short positions to the May maximum of 1.2655. I advise you to sell the pound there only if there is a false breakdown. Short positions can be made immediately for a rebound from 1.2709, or even higher - from 1.2755, counting on the pair's rebound down by 30-35 points inside the day.
The COT report (Commitment of Traders) for May 24 recorded a reduction in long positions and an increase in short ones. However, this did not significantly affect the balance of power. Despite the growth of the pound since the middle of this month, the market remains completely under the control of sellers. Only the lack of fundamental statistics, to which the pair have been reacting quite negatively lately, and small profit-taking from annual lows allowed GBP/USD to recover a little. There are no other objective reasons for growth. The economy continues to slide into recession, inflation is breaking new records, and the cost of living in the UK is steadily rising. The Bank of England continues to rush between two fires, but even despite all this, the governor of the Bank of England, Andrew Bailey, continues to say that the regulator is not going to abandon raising interest rates yet. Rumors spread that the US central bank plans to "pause" the cycle of interest rate hikes in September this year continue to gain momentum, which puts little pressure on the US dollar and leads to a strengthening of the pound. The COT report for May 24 indicated that long non-commercial positions decreased by -667 to the level of 25,936, while short non-commercial positions increased by 454 to the level of 106,308. This led to an increase in the negative value of the non-commercial net position from the level of -79,241 to the level of -80,372. The weekly closing price rose from 1.2481 to 1.2511.
Signals of indicators:Moving averagesTrading is conducted in the area below 30 and 50 daily moving averages, which indicates market uncertainty with further direction.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 upper limit of the indicator around 1.2575 will act as resistance. In case of a decline, the lower limit of the indicator around 1.2560 will provide 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.
