01.10.202013:13 Forex Analysis & Reviews: GBP/USD: plan for the American session on October 1

To open long positions on GBPUSD, you need:

The British pound collapsed against the US dollar after reports that during the next round of trade negotiations, the UK and the EU could not overcome their existing differences. Let's look at the 5-minute chart and talk about where and how you could make money on this downward movement. A sharp break in the support of 1.2925 did not lead to the formation of a sell signal for the pound, as I did not wait for a return to this range. The focus shifted to buying from the level of 1.2869, however, we did not reach it by a couple of points, so entering the market for a rebound from this range was not the right decision. We had to wait for a breakdown of 1.2869 and a test of this level from the bottom up, which also did not happen and the pound went to update the minimum of 1.2819. Only there it was possible to conveniently enter the market in the expectation of a correction of 30-40 points, which took place. I paid attention to this input in my morning forecast.

At the moment, the situation is as follows: to enter long positions again from the level of 1.2819, you need to wait for the formation of a false breakout at this level and only then buy the pound in order to return to the resistance area of 1.2869, where I recommend fixing the profits. Fixing above this range will open a direct path for the pound to a maximum of 1.2925. If there is no activity on the part of buyers at the level of 1.2819 closer to the second half of the day, it is best to abandon purchases until the test of a new minimum of 1.2754, where you can expect another correction of 30-40 points within the day. Given the latest news on Brexit, it is best not to rush into buying the pound, as a break of 1.2819 may return the market to a downward trend.

To open short positions on GBPUSD, you need:

Sellers quickly rehabilitated due to the negative news on Brexit and the task for the second half of the day is to break and consolidate below the support of 1.2819, which will form another signal to enter short positions and increase pressure on the pair with the main goal of returning to the support area of 1.2754, where I recommend fixing the profits. A break in the area of 1.2819 will also completely cancel out the upward correction for the pound, so the fight for this level promises to be quite difficult. In the scenario of an upward correction to sales of GBP/USD, it is best to look only after the formation of a false breakout in the resistance area of 1.2869. If there is no activity from the bears in this range, a larger area for opening short positions will be the level of 1.2925, from where you can sell the pound immediately for a rebound in the expectation of a correction of 30-40 points within the day.

Let me remind you that the COT reports (Commitment of Traders) for September 22 did not record any serious changes in the market, as everyone took a wait-and-see position and looks at how the economy will react to the next phase of growth in the incidence of COVID-19, and how the situation around Brexit will develop further. Most likely, the pressure on the pound will gradually return as the second wave of coronavirus spreads and the negotiations on the UK's trade agreement with the EU become more complicated, where there is no hint of reaching a compromise between the parties. During the reporting week, there was a minimal reduction in short non-commercial positions from the level of 41,508 to the level of 40,523. Long non-profit positions also fell from 43,801 to 43,487. As a result, the non-commercial net position remained virtually unchanged at 2,964 compared to 2,293 a week earlier.

Signals of indicators:

Moving averages

Trading is below 30 and 50 daily averages, which indicates the likelihood of a bearish trend resuming.

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

Bollinger Bands

In the case of an upward correction, the average border of the indicator around 1.2910 will act as a resistance.

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.