21.11.202209:14 Forex Analysis & Reviews: GBP/USD: trading plan for European session on November 21. Commitment of Traders COT report (analysis of yesterday trades). Bears tighten their grip on GBP

On Friday, there was only one entry point. Now, let's look at the 5-minute chart and figure out what actually happened. A rise and a false breakout of the resistance level of 1.1947 in the afternoon gave an excellent sell signal. The pair sank by more than 70 pips...

When to open long positions on GBP/USD:

The US dollar managed to recover following the housing market data as GBP bulls failed to push the pair above a strong resistance level of 1.1947 in the morning. It is crucial to pay attention to this level because its breakout may trigger a trend reversal. Today, the economic calendar for the UK is empty. So, bearish pressure on the pair could persist. Besides, negative news from China is also weighing on the pair. Beijing reported a significant increase in the death toll. So, bulls are now anticipating the speech of Sir John Cunliffe, a member of the Bank's Financial Policy and Monetary Policy Committees. His remarks could somehow help the pound sterling rise. Otherwise, a long-awaited strong bearish correction is likely to take place. It would be wise to open long positions if the pair declines to the support level of 1.1768, the lower border of the sideways channel. Only a false breakout of this level will provide a buy signal. In this case, the pair may rebound to the resistance level of 1.1857. The moving averages are passing in the negative territory above this level. The main task of the bulls today is to regain control of this level. If they fail, the bullish momentum is likely to wane. A breakout, an upward retest of this level as well as hawkish statements of Sir John Cunliffe could facilitate the growth of the pound sterling. Thus, the bulls may take the upper hand. A breakout above 1.1857 will initiate a rapid rise to 1.1947. A more distant target will be the 1.2021 level where I recommend locking profits. If the bulls fail to push the price above 1.1768, which may happen in the first half of the day, the pair is likely to face strong bearish pressure. If so, it is better to open long positions only after a false breakout of 1.1714 takes place. You can buy GBP/USD immediately after a bounce of 1.1650 or 1.1594, keeping in mind an upward intraday correction of 30-35 pips.

When to open short positions on GBP/USD:

Sellers managed to take the upper hand after the pair dropped to 1.1857in the Asian session, which only increased the pressure on the pound sterling. There will hardly be any drivers that could help bulls push the pair back to 1.1857. A false breakout of this level will provide an excellent sell signal with the prospect of a decline to 1.1768, the lower border of the sideways channel. A breakout and a downward retest of this level will give a new sell signal. Thus, the price may decline to 1.1714. it will greatly undermine the bullish trend. A more distant target will be the 1.1650 level where I recommend locking in profits. A retest of this level will deliver a severe blow to the bullish bias. If GBP/USD rises and bears show no energy at 1.1857, the situation is likely to stabilize. Bulls will return to the market, betting on a new upward movement to 1.1947. Only a false breakout of this level will provide a new selling opportunity. If bulls do not make attempts to regain the upper hand at this level, you can sell GBP/USD immediately at a bounce from 1.2021, keeping in mind a downward correction of 30-35 pips.

COT report

The Commitments of Traders report for November 8 logged a drop in the short positions and a rise in the long ones. The BoE meeting has tipped the balance in the market. Although the regulator confirmed it would abandon aggressive tightening, traders continued to buy the pound sterling at lows. The British currency maintains bullish momentum amid US inflation data. However, it is hard to predict for how long the pounds sterling will be able to consolidate at current highs. The US economy is facing serious economic problems. The recent GDP data confirmed a contraction. A hawkish stance makes the situation even worse. Labor market reports are on tap soon. If the figures are downbeat, the pound sterling could take a nosedive. The latest COT report revealed that the number of long positions of the non-commercial group of traders rose by 1,651 to 36,630, while the number of short positions fell by 3,450 to 76,365. This resulted in the non-commercial net position declining to -39,735 from -44,836. The weekly closing price went up to 1.1549 from 1.1499.

Indicators' signals:

Trading is carried out below the 30 and 50 daily moving averages. It indicates that bears are trying to take control.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 (1-hour) chart and differ from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

If GBP/USD moves up, the indicator's upper border at 1.1947 will serve as resistance.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions who 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.