06.11.202413:20 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on November 6th (Analysis of Morning Trades)

For Long Positions on GBP/USD:The pound remains turbulent, and despite the absence of U.S. statistics, high volatility is expected to persist. Given Donald Trump's victory in the U.S. presidential elections and its impact on risk assets, it's advisable to approach buying cautiously. The best-case scenario involves a decline and the formation of a false breakout near the newly established support at 1.2881, formed during the first half of the day. This would confirm a valid entry point for long positions, targeting a recovery to 1.2925. A breakout and retest of this range would create a new entry point for long positions; the target is 1.2965, where the moving averages are located. The ultimate target will be the 1.2994 level, where profits will be taken.

If GBP/USD declines and no bullish activity is seen near 1.2881, the pair risks falling further to the weekly low of 1.2845. A false breakout at this level would provide another opportunity to open long positions. Alternatively, I plan to buy on a rebound from the 1.2800 minimum, targeting a 30-35 point correction within the day.

For Short Positions on GBP/USD:Sellers have shown activity but have not yet consolidated near the monthly low. If the pair rises, focus should shift to defending the 1.2925 resistance, where a false breakout would offer a suitable selling opportunity, targeting a decline to the newly established support at 1.2881. A breakout and retest from below of this range would further pressure the bulls, triggering stop-loss orders and paving the way to 1.2845. The ultimate target will be the 1.2800 level, where profits will be taken. A test of this level would reinforce the bearish trend.

If GBP/USD rises and no bearish activity is observed at 1.2925, buyers may attempt to keep the pair trading within a sideways channel, at least until tomorrow's Bank of England meeting. In this scenario, sellers would likely retreat to the 1.2965 resistance area, where I will sell only on a false breakout. If there's no downward movement there, I will look for short positions on a rebound from 1.2994, targeting a 30-35 point correction within the day.

The Commitments of Traders (COT) report for October 29 showed a reduction in long positions and a minimal increase in short positions. The likelihood of the Bank of England cutting interest rates at its next meeting continues to pressure the pound. Add to this the recent turmoil surrounding the UK budget, which the new Prime Minister plans to fund through tax increases, creating an unfavorable outlook for growth. Against the backdrop of the U.S. elections and anticipated rate cuts in the UK, the pound is likely to struggle to rise.

The latest COT report indicated that long non-commercial positions decreased by 7,967 to 132,636, while short non-commercial positions increased by 253 to 66,280. As a result, the gap between long and short positions widened by 1,079.

Indicator Signals:

Moving Averages:

Trading is below the 30- and 50-day moving averages, indicating continued weakness in the pound.

Note: The moving averages' periods and prices are considered on the H1 hourly chart by the author and differ from the general definitions for daily moving averages on the D1 chart.

Bollinger Bands:

In the event of a decline, the lower boundary of the indicator at 1.2830 will act as support.

Indicator Descriptions:

• Moving Average (MA): Identifies the current trend by smoothing out volatility and noise.
  • Period: 50 (yellow on the chart)
  • Period: 30 (green on the chart)
• MACD (Moving Average Convergence/Divergence): Tracks the convergence/divergence of moving averages.
  • Fast EMA: Period 12
  • Slow EMA: Period 26
  • SMA: Period 9
• Bollinger Bands: Indicates volatility and key price action levels.
  • Period: 20
• Non-Commercial Traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
• Long Non-Commercial Positions: The total long open positions held by non-commercial traders.
• Short Non-Commercial Positions: The total short open positions held by non-commercial traders.
• Net Non-Commercial Position: The difference between short and long positions held by non-commercial traders.