20.01.202515:15 Forex Analysis & Reviews: GBP/USD: Plan for the American Session on January 20 (Review of Morning Trades). The Pound Faces Continued Challenges

In my morning forecast, I highlighted the 1.2162 level as a key decision point for market entry. Let's analyze the 5-minute chart to see what transpired. A decline and the formation of a false breakout at this level provided a good buying opportunity for the pound, resulting in a rise of only 30 points so far. The technical picture has been revised for the second half of the day.

Requirements for Opening Long Positions on GBP/USD:

The absence of UK economic data has maintained pressure on the British pound, which is currently facing numerous challenges. Even slight rallies are being seized by sellers to increase short positions, highlighting significant weakness and market concerns about the UK economy.

In the second half of the day, the focus will be on Donald Trump's inauguration. If the pair declines, I plan to open long positions only after a false breakout near the 1.2162 support, similar to the morning trade setup. The target will be a recovery toward the 1.2215 resistance, formed during the first half of the day. A breakout and retest of this range from above would provide a new entry point for long positions, aiming to push the pair toward 1.2260, which would ease pressure on buyers. The ultimate target would be the 1.2303 level, where I plan to take profit.

If GBP/USD declines further and there is no buyer activity at 1.2162—which seems likely—the pound could drop even lower. In that case, only a false breakout near the 1.2097 low would provide a suitable buying condition. Long positions on a rebound can be considered from 1.2065, targeting an intraday correction of 30–35 points.

Requirements for Opening Short Positions on GBP/USD:

Sellers did significant work in the first half of the day, but breaking below 1.2162 has proven challenging. This level has been tested for strength four times in the past week, suggesting buyers are actively defending it. For this reason, I will continue to sell.

A false breakout near 1.2215 would create a good entry point for short positions, targeting a drop to 1.2162. A breakout and retest of this range from below would trigger stop-loss orders, opening the path to 1.2097, signaling a strengthening bearish market. The ultimate target would be the 1.2065 level, where I plan to take profit.

If demand for the pound returns in the second half of the day and bears fail to act near 1.2215, where moving averages favor sellers, it's better to delay short positions until the 1.2260 resistance is tested. I will open short positions there only after a false breakout. If no downward movement occurs at that level, I will look for short opportunities at 1.2303, but only for an intraday correction of 30–35 points.

The Commitments of Traders (COT) report for January 7 highlighted an increase in short positions and a reduction in long positions. Overall, market dynamics haven't changed significantly, and the pound continues to lose ground against the US dollar despite a prevalence of bullish positions.

Upcoming UK inflation and GDP data could complicate the Bank of England's decisions, reducing the likelihood of a significant GBP/USD rally. According to the COT report:

• Non-commercial long positions fell by 4,859 to 81,343.
• Non-commercial short positions increased by 1,470 to 66,837.
• The net gap between long and short positions widened by 142.

Indicator Signals:

Moving Averages:

The pair is trading slightly below the 30- and 50-day moving averages, signaling renewed pressure on the pound.

Note: These moving averages are based on the H1 chart and differ from classical daily moving averages on the D1 chart.

Bollinger Bands:

In the event of a decline, the lower boundary of the indicator at 1.2160 will act as support.

Indicator Descriptions:

• Moving Average (MA): Smooths volatility and noise to determine the current trend. Period 50 (yellow on the chart); Period 30 (green on the chart).
• MACD: Moving Average Convergence/Divergence; Fast EMA – 12, Slow EMA – 26, SMA – 9.
• Bollinger Bands: Period 20.
• Non-commercial traders: Speculative participants like individual traders, hedge funds, and institutions using futures for speculative purposes.
• Long non-commercial positions: Total long positions held by speculative traders.
• Short non-commercial positions: Total short positions held by speculative traders.
• Net non-commercial position: Difference between short and long positions held by speculative traders.