08.04.202115:25 Forex Analysis & Reviews: GBP/USD: plan for the US session on April 8 (analysis of morning trades)

To open long positions on GBP/USD, you need to:

In my morning forecast, I focused on the level of 1.3735 and recommended that you make decisions on entering the market from it. Let's look at the 5-minute chart and analyze the entry point. It can be seen that after an attempt to break below 1.3735, there was a quick return of GBP/USD to this level and the bulls did not let the pound lower any more. Several false breakouts from the top to the bottom of 1.3735 led to the formation of an excellent entry point into long positions in the expectation of an upward correction, which continued at the time of writing the forecast. The key target remains the resistance at 1.3786.

The bulls coped with the morning task perfectly, thus, the technical picture in the pair did not change. Given that the market is on the side of buyers, the focus in the second half of the day will be shifted to the resistance of 1.3786, on the breakdown of which the further upward correction depends. There are also moving averages that play on the side of the sellers of the pound. A breakout and consolidation at this level with a reverse test from top to bottom will form an additional entry point into long positions, which will open a direct road to the maximum of 1.3834, where I recommend taking the profits. In the event of a repeated decline in GBP/USD to the support area of 1.3735, most likely the pressure on the pair will return: in this scenario, it is best to postpone purchases until the test of a larger minimum of 1.3704 or open long positions from the large March support of 1.3670 immediately on a rebound in the expectation of an upward correction of 25-30 points within the day.

To open short positions on GBP/USD, you need to:

Sellers did not cope with their task for the first half of the day and now they again need to think about how to keep the pound above 1.3786. The optimal scenario will be short positions, provided that a false breakout is formed in the area of this resistance, where the moving averages are also located, playing on the side of sellers. If there is no bear activity there, I recommend opening short positions immediately for a rebound only from the larger resistance of 1.3834, counting on a correction of 20-25 points within the day. An important task for sellers is to return and consolidate below the level of 1.3735. Only the reverse test of this area from the bottom up forms an entry point into short positions to reduce the GBP/USD to a new low of 1.3704, where I recommend taking the profits. A more distant target will be the support of 1.3670.

Let me remind you that the COT reports (Commitment of Traders) for March 30 recorded a reduction in both long and short positions, while the total non-commercial net position increased. The bulls were active last week with each approach of the pound to large support levels, which led to such confusion in the market. The data that was released on the UK economy allowed us to build a new upward correction for the pound, even if only in the short term. Among investors and economists, confidence continues to grow that the UK economic recovery is gaining quite a good momentum, which will support the British pound in the summer of this year, as disagreements increase in the Bank of England over how the economy will develop further and when to respond to all this. Those who expect to buy the pound should take a closer look at the market. Thus, long non-commercial positions declined from 51,843 to 47,222. At the same time, the short non-profit fell from 30,024 to 22,263, indicating a major revision of forces in the market in the near future. As a result, the non-profit net position rose to 29,959 from 21,819 a week earlier. The weekly closing price fell to 1.3774 from 1.3859.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily averages, which indicates the probability of a decline in the pound.

Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.3765 will lead to a new wave of growth of the pound. If the pair falls, the lower limit of the indicator around 1.3720 will provide support.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that 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 position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.