29.01.202519:51 Forex Analyse & Reviews: GBP/USD: Trading Plan for the U.S. Session on January 29th (Review of Morning Trades)

In my morning forecast, I highlighted 1.2415 as a key level for market entry. Let's examine the 5-minute chart to analyze what happened. The pair dropped to 1.2429, but a false breakout did not materialize, so I did not enter any trades on GBP/USD. The technical outlook for the second half of the day has been adjusted.

Long Position Strategy for GBP/USD

With no UK economic data releases and uncertainty over further pound appreciation, buyers decided to take profits ahead of the Federal Reserve's rate decision, which likely led to a mild correction in GBP/USD during the first half of the day.

Now, the key focus is how the Fed will proceed. A dovish stance from the FOMC would weaken the dollar and support the pound. However, a cautious tone regarding future rate cuts would increase selling pressure on GBP/USD.

If the pair declines, I will look for long positions only after a false breakout at the 1.2403 support level, expecting a rise toward 1.2460—a resistance formed in the first half of the day. This is where sellers are likely to be active.

A break and retest of 1.2460 from above would provide a new buying opportunity, targeting 1.2519, which would strengthen the bullish trend. The final upside target is 1.2571, where I plan to take profit.

If GBP/USD declines further and buyers fail to act at 1.2403, pressure on the pair will increase. In that case, I will consider long positions only after a false breakout at 1.2349. Alternatively, I will buy on a rebound from 1.2301, targeting a 30-35 point intraday correction.

Short Position Strategy for GBP/USD

Sellers are attempting to extend the correction that started yesterday, but with major fundamental events ahead, momentum has been limited.

The 1.2460 resistance level is critical, as it coincides with the moving averages, which are supporting bearish pressure. A false breakout at this level, combined with a hawkish Fed stance, would provide a selling opportunity, targeting 1.2403.

A break and retest of 1.2403 from below would trigger stop-loss orders, opening the door for a decline to 1.2349. The final bearish target is 1.2301, where I plan to take profit.

If GBP/USD rises in the second half of the day and sellers fail to act at 1.2460, the bullish trend will likely continue. In this case, I will delay short positions until a test of 1.2519, which aligns with the weekly high. I will only enter short trades after a failed breakout at this level.

If bearish momentum remains absent at 1.2519, I will consider short positions from 1.2571, expecting a 30-35 point downward correction.

Commitments of Traders (COT) Report

The January 21 COT report showed an increase in short positions and a decline in long positions, further shifting sentiment in favor of sellers.

This is not surprising, given the weak UK economic data and rising inflation, which is putting pressure on the Bank of England (BoE). The BoE is likely to cut rates again at its next policy meeting, a scenario that is already being priced into the pound.

However, market movement will also depend on decisions made by the Trump administration, which could impact the strength of the U.S. dollar.

According to the COT report:

• Long non-commercial positions fell by 4,861 contracts to 75,696.
• Short non-commercial positions increased by 3,834 contracts to 83,953.
• As a result, the gap between long and short positions narrowed by 1,018.

Indicator Signals

Moving Averages

GBP/USD is trading below the 30- and 50-period moving averages, suggesting further downward potential for the pound.

Note: The moving averages discussed refer to the H1 chart and may differ from classic daily moving averages (D1).

Bollinger Bands

If the pair declines, the lower Bollinger Band at 1.2405 will act as support.

Indicator Descriptions

• Moving Average (MA): Identifies the current trend by smoothing out volatility and noise.
  • 50-period MA (Yellow)
  • 30-period MA (Green)
• MACD (Moving Average Convergence/Divergence)
  • 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 that use the futures market for speculation.
• Long non-commercial positions: Total long positions held by non-commercial traders.
• Short non-commercial positions: Total short positions held by non-commercial traders.
• Net non-commercial position: The difference between long and short positions held by non-commercial traders.