24.01.202415:02 Forex Analysis & Reviews: GBP/USD: trading plan for the US session on January 24th (analysis of morning deals). Confidence returns to the pound

In my morning forecast, I drew attention to the level of 1.2716 and planned to make trading decisions based on it. Let's look at the 5-minute chart and analyze what happened there. The rise and the formation of a false breakout led to a good selling entry point in continuation of yesterday's trend, but as you can see on the chart, the drop did not materialize, which resulted in loss-taking. Similar sales from the level of 1.2765 closer to the middle of the day are still playing out, with the downward movement reaching about 15 points, which is not bad for a correction against such a bullish market. The technical picture was slightly revised for the second half of the day.

To open long positions on GBP/USD, the following conditions are required:

Very strong data on activity in the UK made traders think that the Bank of England has no need to quickly abandon high-interest rates, which allows it to combat inflation more effectively, which showed growth in the latest report. All of this triggered excellent purchases of the pound, which soared to a new weekly high. However, we should remember that the figures for the manufacturing PMI, services PMI, and composite PMI for the United States are ahead of us. Strong data could bring pressure back to the pair or limit its future upward potential. I plan to take action in case of a drop in a false breakout around the new support level of 1.2735, which may occur after the release of US statistics. This will provide an excellent entry point for long positions, continuing the bullish trend to reach 1.2765. A breakthrough and consolidation above this range will strengthen demand for the pound and open the way to 1.2797. The ultimate target will be 1.2823, where I plan to make a profit. In the scenario of a pair decline and lack of activity by the bulls at 1.2735, trading will move within a sideways channel, and pressure on the pound will increase. In this case, I will postpone purchases until the test of 1.2707, where the moving averages are located. Only a false breakout will confirm the correct entry point into the market. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2678, with a 30-35 point correction target within the day.

To open short positions on GBP/USD, the following conditions are required:

Sellers are still reluctant to act, as the bullish trend has returned after a rather severe correction yesterday. In the second half of the day, I will act on the rise after forming a false breakout around the resistance level of 1.2765, similar to what I discussed earlier. Only this will confirm the presence of large sellers in the market and provide an entry point for selling with the aim of a larger drop towards the support level of 1.2735, formed at the end of the first half of the day. A breakthrough and retest from below to above this range will deal a more serious blow to the bullish positions, bringing balance back to the market and opening the path to 1.2707. The ultimate target will be the area around 1.2678, where I plan to make a profit. In the scenario of further growth of GBP/USD and the absence of activity at 1.2765 in the second half of the day, buyers will continue to dominate to reach the annual high. In this case, I will postpone selling until a false breakout at 1.2797. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.2823, but only with the expectation of a pair correction down by 30-35 points within the day.

In the COT report (Commitment of Traders) for January 16th, there was a reduction in short positions and an increase in long positions. Recent fundamental statistics, especially inflation-related, have allowed the British pound to stay afloat. Not long ago, representatives of the Bank of England made it clear that they would maintain rates at their current highs and combat rising prices despite economic issues. This is both good and bad for the pound. It's good in the short term but bad in the long term because the normalization of economic growth rates will take longer than expected. In the near future, data on activity for January will shed light on the current state of affairs. In the last COT report, it was mentioned that long non-commercial positions increased by 5,546 to the level of 66,230, while short non-commercial positions decreased by 4,651 to the level of 35,299. As a result, the spread between long and short positions increased by 1,480.

Indicator signals:

Moving Averages

Trading is conducted above the 30 and 50-day moving averages, indicating further pound growth.

Note: The author examines the period and prices of moving averages on the 1-hour H1 chart, which differs from the general definition of classic daily moving averages on the daily D1 chart.

Bollinger Bands

In case of a decline, the lower boundary of the indicator, around 1.2649, will act as support.

Indicator Descriptions:

• Moving Average (determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
• Moving Average (determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence - convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands. Period 20.
• Non-commercial traders - speculators, such as individual traders, hedge funds, and large institutions, 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 positions of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.