07.05.202006:30 Forex Analysis & Reviews: GBP/USD: plan for the European session on May 7. Pound remains under pressure ahead of Bank of England decision on interest rates

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

The British pound continued to fall against the US dollar yesterday , successfully consolidating in the afternoon below the support of 1.2360, from where I recommended continuing to open short positions. If you look at the 5-minute chart, you can see how after another decline in the pound to the support of 1.2360, there was a breakdown and consolidation below this level, and the bulls failed to go above this range after three attempts. Expectations of gloomy forecasts from the Bank of England on the prospects of the UK economy continue to put pressure on the pound. To smooth the situation, the bulls need to return and consolidate on the resistance of 1.2342, above which the moving averages pass. After this, you can expect a low upward correction of GBP/USD to the highest area of 1.2389, where I recommend taking profits. In case the pound declines further, there is a probability of forming a false breakout in the support area of 1.2300, but it is best to take your time with long positions and wait for the Bank of England's decision on interest rates, as well as the speech of the new governor of the central bank, Andrew Bailey. It is best to open long positions in GBP/USD on a rebound from major lows in the area of 1.2275 and 1.2250, and then count on a correction of no more than 30-35 points within the day.

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

Bears continue to bend their line and there are no signals to end the bearish trend yet. Pressure on the pound continues while trade is below resistance 1.2342, and forming a false breakout in this range, after the publication of the decision on interest rates, will only increase the presence in the market sellers that will push GBP/USD to lows of 1.2300 and 1.2275. However, the long-term goal is still the April 21 low at 1.2250, where I recommend taking profits. In case the pound increases above the resistance of 1.2342, which may happen after the speech of Bank of England Governor Andrew Bailey, or the introduction of new measures to help the UK economy, it is best to return to short positions only after testing the high of 1.2389, or sell GBP/USD immediately on the rebound from a large resistance of 1.2446 based on a decrease of 30-40 points within the day.

Signals of indicators:

Moving averages

Trading is below 30 and 50 moving averages, which indicates the formation of a bearish momentum.

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

Bollinger bands

If the pound rises in the first half of the day, the upper border of the indicator at 1.2389 will act as resistance. A break of the lower border of the indicator in the region of 1.2300 will increase the pressure on the pair.

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