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18.12.202414:44 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on December 18th (Review of Morning Trades). Pound Rises After Inflation Growth

Relevance up to 06:00 2024-12-19 UTC--5

In my morning forecast, I highlighted 1.2695 as a key level for market entry decisions. Let's analyze the 5-minute chart to understand the outcome. While a decline occurred, high volatility prevented the formation of a false breakout, leaving me without trades. The technical picture has been revised for the second half of the day.

Exchange Rates 18.12.2024 analysis

Long Position Requirements for GBP/USD:

News of rising core inflation in the UK led to a sharp rally in the British pound. This is precisely what the Bank of England had been fearing in recent months, making tomorrow's meeting far more critical than previously anticipated.

Today, beyond the Federal Reserve meeting, data on US building permits and housing starts could influence the pair's direction. A decrease in these figures would weaken the dollar further. However, hints from Jerome Powell about halting the easing cycle could lead to renewed USD strength and selling of risk assets, including the British pound.

If strong US data exerts pressure on the pound, I will focus on 1.2695. A false breakout there could provide a solid entry point for long positions, targeting a recovery towards 1.2725. A breakout and retest of this range from above would create another long entry opportunity, aiming for 1.2761, where buyers may face resistance. The ultimate target would be 1.2785, where I plan to secure profits.

If GBP/USD declines further and buyer activity around 1.2695 is absent, buyers will lose momentum. In such a case, only a false breakout near the next support at 1.2667 would justify opening long positions. Alternatively, I would consider long positions on a rebound from 1.2639, targeting a 30–35-point intraday correction.

Short Position Requirements for GBP/USD:

Pound sellers actively defended 1.2725 during the first half of the day. A false breakout at this level could serve as another entry point for short positions, targeting 1.2695, where moving averages currently favor bulls.

A breakout and retest of this range from below, alongside strong US data and a hawkish Fed stance, could trigger stop-loss orders, paving the way for a decline to 1.2667, delivering a significant blow to bullish positions. The ultimate target would be 1.2639, where I plan to secure profits.

If demand for the pound returns later today after weak US data, and sellers fail to assert control at 1.2725, buyers may attempt another upward move. In this case, sellers might retreat to the 1.2761 resistance level, where I will consider selling only after an unsuccessful breakout attempt. Should no downward movement occur there, I would look for short positions at 1.2785, aiming for a 30–35-point downside correction.

Exchange Rates 18.12.2024 analysis

Commitment of Traders (COT) Report

The December 10 COT report revealed a decrease in short positions and an increase in long positions. However, the overall market dynamics remained largely unchanged, as many traders adopted a cautious stance ahead of the Bank of England's final meeting of the year.

According to the COT report, long non-commercial positions rose by 4,707 to 102,763, while short non-commercial positions fell by 3,092 to 75,638. This resulted in a net increase of 11,321 contracts in favor of long positions.

Exchange Rates 18.12.2024 analysis

Indicator Signals

Moving AveragesTrading occurs above the 30- and 50-day moving averages, indicating potential further growth for the pair.

Note: The moving averages mentioned refer to the hourly H1 chart and differ from classical daily moving averages on the D1 chart.

Bollinger BandsIn the event of a decline, the lower boundary of the indicator near 1.2685 will act as support.

Indicator Descriptions

  • Moving Average (MA): Smooths out price volatility to identify the current trend. Period – 50 (yellow line); Period – 30 (green line).
  • MACD (Moving Average Convergence/Divergence): Measures momentum. Fast EMA – period 12; Slow EMA – period 26; SMA – period 9.
  • Bollinger Bands: Defines dynamic support and resistance levels. Period – 20.
  • Non-commercial traders include speculators like hedge funds and institutions using the futures market for speculative purposes.
  • Long non-commercial positions: Total long positions held by speculators.
  • Short non-commercial positions: Total short positions held by speculators.
  • Net non-commercial position: The difference between long and short non-commercial positions.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Miroslaw Bawulski,
Analytical expert of InstaSpot
© 2007-2024
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