27.04.202113:22 Forex Analysis & Reviews: GBP/USD: plan for the US session on April 27 (analysis of morning trades)

To open long positions on GBPUSD, you need to:

In my morning forecast, I paid attention to the level of 1.3892 and recommended making a decision. Let's look at the 5-minute chart and look at the entry points: after a small upward correction of the pair in the first half of the day in this range, the bears achieved the formation of a false breakout, where I recommended opening short positions in the morning. As a result, the downward movement was about 35 points. Already closer to lunch, the bulls returned the pair to the level of 1.3892, intending to achieve its breakdown.

Buyers did their best to get above the resistance of 1.3892 in the first half of the day. However, another false breakout led to an increase in pressure on the pair. Then the retail sales report from the Confederation of British Industrialists supported the pound, which kept the technical picture of GBP/USD unchanged for the second half of the day. However, it is necessary to proceed with extreme caution since, most likely, the trade will again be conducted around the level of 1.3892, from which decisions will have to be made. Only a return and a test of this range from top to bottom on the volume will allow you to increase long positions, which forms a signal to buy the pound in the expectation of growth to the maximum of 1.3944. A more distant target will be the area of 1.4000, where I recommend fixing the profit. If the pressure on the pound returns in the second half of the day after the data on consumer confidence in the US, I recommend not to rush to buy: the best scenario will be a test of large support of 1.3838, which was formed last Friday. From this level, you can buy the pound immediately for a rebound with the expectation of a correction of 20-25 points within the day. The next major support is seen around 1.3792.

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

In the first half of the day, sellers performed well after a false breakout in the resistance area of 1.3892. In the afternoon, they still need to defend this level. Only another unsuccessful consolidation above the resistance of 1.3892 will lead to the formation of a signal to open short positions in the expectation of a larger downward trend in the support area of 1.3838. It will be possible to talk about a breakdown of this range only after good data on the US economy, which may push the pair even lower - to the area of 1.3792, where I recommend taking the profits. In the scenario of the bulls returning control over the level of 1.3892, the best option is to sell the pound only for a rebound from a large local high of 1.3944, based on a downward correction of 20-25 points within the day. The next major resistance for selling is seen around 1.4000.

Let me remind you that the COT reports (Commitment of Traders) for April 20 recorded an increase in both long and short positions. The total non-commercial net position almost did not change, only slightly decreasing from the previous value. The growth of positions indicates a return to the market of players who expect further growth of the pound. However, such high prices are very attractive for sellers, so there is a sharp increase in short positions. The good fundamental data released last week on the UK economy proves a fairly high probability of strong economic growth in the 2nd quarter of this year. It will continue to contribute to the growth of the British pound in the medium term, so I recommend betting on its further strengthening against the US dollar. It is important how the market will react to the fundamental reports on the US economy this week and the Federal Reserve's decision on interest rates – this will be the main reason for the further movement of the pound along with the trend or a downward correction of the pair. The COT report shows that long non-profit positions rose from 52,851 to the level of 61,053. At the same time, the short non-profit rose from the level of 27,261 to the level of 35,875, resulting in the non-profit net position only slightly decreased to 25,178 against the level of 25,590 a week earlier. But the closing price, on the contrary, jumped to 1.3991 against 1.3753 last week, which indicates the upward potential of the pair.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily averages, which indicates market uncertainty with the direction.

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 1.3910 will lead to a new wave of growth of the pound.

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 specific 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.