03.02.202114:15 Forex Analysis & Reviews: GBP/USD: plan for the US session on February 3 (analysis of morning trades)

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

In my morning forecast, I paid attention to sales in the area of the level of 1.3657. Let's look at the 5-minute chart and talk about what happened. It is visible how the bears achieve a breakout of the support of 1.3657 and even consolidate below this range, which forms a sell signal. However, the market did not go down from the first time, and after the release of data on activity in the service sector, the British pound temporarily returned above the level of 1.3657, which led to the demolition of stop orders. After some time, the bears again broke below 1.3657, testing this area from the bottom up, which formed another signal to open short positions. At the time of writing, the downward movement was about 30 points, however, we have not yet reached the target level of 1.3612.

The bulls will try to do everything to achieve a return to the level of 1.3657 in the second half of the day, as the further upward correction of the pair depends on it. Only a break and a test of this area from top to bottom will form a convenient entry point into long positions, which will return GBP/USD to the resistance area of 1.3707, where I recommend taking the profits. This scenario is realized only under the condition of rather weak fundamental statistics on the US economy, which is expected in the second half of the day. In the scenario of a further decline in the pound, it is best not to rush to buy, and wait for the test of the minimum of 1.3612 from where you can open long positions only if a false breakout is formed. If there is no rapid upward movement from this area, it is best to buy GBP/USD for a rebound from the low of 1.3575.

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

The breakout and consolidation below the level of 1.3657 occurred. As long as the trade is conducted below this range, the pressure on the pound will remain, and the entire calculation will shift to data on activity in the US services sector. The main target of the bears will be the minimum of 1.3612, where the bear market stopped yesterday. Its breakout and a test from the bottom up will only aggravate the situation of GBP/USD, which will lead to a larger wave of the pair falling to the minimum of 1.3575, where I recommend taking the profits. In the scenario of the bulls returning control over the level of 1.3657 in the second half of the day, it is best to wait for a larger recovery of GBP/USD to the resistance area of 1.3706, from where you can open short positions immediately for a rebound in the expectation of a correction of 20-25 points within the day.

Let me remind you that the COT reports (Commitment of Traders) for January 26 recorded an increase in both long and short positions. This time, there were much more sellers, which led to a decrease in the positive delta. The unsuccessful attempts of the bulls to break above the annual highs still do not pass without a trace, forcing traders to increase short positions in the expectation of a more active downward correction of the British pound. Long non-profit positions rose from the level of 45,904 to the level of 47,360. At the same time, the short non-profit jumped from the level of 32,199 to the level of 39,395, which is a very significant increase. As a result, the non-profit net position declined to 7,965 from 13,705 a week earlier. And although traders are trying to take a more wait-and-see position in the area of annual highs, and this is a consequence of the fact that it is very difficult for the bulls to update them, the demand for the pound will still be quite high. As the quarantine measures are lifted, which were strengthened due to the new COVID-19 strain, the upward movement of the GBP/USD pair will be more active. The support of the population and the labor market, which may last until the beginning of the summer of 2021, will also have a positive impact on the British pound. All the talk about negative interest rates on the part of the Bank of England does not yet have a real basis. In the near future, a large report of the English regulator on this topic will be published, which can describe in more detail the picture with the further course of interest rates.

Signals of indicators:

Moving averages

Trading is below 30 and 50 daily averages, which indicates a further 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

In the case of an upward correction, the upper limit of the indicator in the area of 1.3680 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.