Relevance up to 08:00 2022-06-14 UTC–4
In the first half of the day, quite a lot of signals were formed to enter the market. Let’s look at the 5-minute chart and figure out what happened. A false breakout at 1.2237 led to a signal to open long positions, which allowed the pound to go back to 1.2275 and take about 40 points from the market. A false breakout at 1.2275 formed an excellent sell signal further along with the trend, which resulted in a major drop in the pair by more than 60 points. A breakout and an update of 1.2237 from the bottom up is an additional sell signal with a downward movement of 37 points. At the time of writing, trading was already below 1.2201, and the bears have achieved an update of annual lows. And what were the entry points for the euro this morning?
To open long positions on GBP/USD, you need:
Buyers of the pound have nothing to count on today, so it’s better not to rush to find the bottom – obviously, it won’t be soon. Given that there are no important statistics on the US in the afternoon, the bulls will continue to take a wait-and-see position, since it has long been clear to everyone where the market will follow in the near future. Only the formation of a false breakdown at 1.2161 is, for a moment, an annual minimum, will lead to the first signal to open long positions in the calculation of a rebound up at the beginning of the week after another crazy rally. An equally important task for the bulls in the afternoon will be to return the new resistance of 1.2220 under control, which will be quite difficult to do in the current conditions – with each increase there will be a lot of people willing to sell the pound. A breakout and a reverse test from top to bottom of 1.2220 will reduce the pressure and allow you to get out to 1.2269, where I recommend fixing the profits. The longer-range target will be the 1.2315 area, where the moving averages playing on the side of the bulls pass. In the event of a further decline in the pound, which is more likely, as well as the absence of buyers at 1.2161, the pressure on the pair will only increase. This will open the road to 1.2122. 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 do not advise buying GBP/USD immediately on the bounce, only false breakouts in the area of 1.2074 and 1.2030 will allow you to count on a correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
Of course, the formation of a false breakout at 1.2220, by analogy with what I discussed above, would be the ideal scenario for those who did not have time to sell the pound in the first half of the day. For this reason, I recommend focusing on 1.2220. If the bears push through 1.2161, new stop orders of the bulls will come into play and the pair will instantly collapse to new lows. The reverse test from the bottom up of 1.2161 will form an additional sell signal, allowing you to dump GBP/USD in the area of 1.2122, from which there is a direct road to 1.2074, where I recommend fixing the profits. The longer-range target will be a minimum of 1.2030. With the option of GBP/USD growth and lack of activity at 1.2220, an upward jerk may occur against the background of the demolition of bulls’ stop orders. In this case, I advise you to postpone short positions until 1.2269. 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 1.2315, or even higher – from 1.2343, 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 give up on raising interest rates yet. Rumors spread that the US central bank plans to “pause” the cycle of interest rate hikes as early as September of this year continues 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 below 30 and 50 daily moving averages, which indicates the development of a bearish market scenario.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 in the area of 1.2269 will act as resistance.Description of indicatorsMoving 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 9Bollinger Bands (Bollinger Bands). Period 20Non-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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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