23.09.202108:32 Forex Analysis & Reviews: GBP/USD trading plan for European session on September 23, 2021. COT report (analysis of previous trading day). GBP trades lower. Bears' target seen at 1.3615 support

Long positions in GBP/USD:

Yesterday, a few sell signals were generated. Let's take a look at the M5 chart and analyze what had happened there. In my previous review, I focused attention on the 1.3640 and said it would be wise to enter the market from this mark. A breakout and test of this range from bottom to top generated a strong sell signal. The quote was seen to reach new swing lows. However, the fall was not as steep as expected ahead of the outcome of the FOMC meeting. A small bullish bounce took place right at the moment the interest rate decision was announced. As a result, a false breakout occurred at 1.3673, signaling to sell the pound sterling. Consequently, the quote fell to new lows.

Yesterday, the US Federal Reserve said it expected to start tapering in November and end it by the middle of 2022. Clearly, this was a strong bearish signal for the pound sterling. At the same time, that was what many traders expected from the regulator. That is why if bulls try harder, demand for the sterling may increase soon and the September bearish trend may end. In terms of today's macroeconomic calendar, the services PMI is scheduled for release in the United Kingdom. Its results may help bears to regain control over the market. So far, bulls should prevent a breakout of the next swing low around 1.3615. Only a false breakout may generate a buy signal against the trend and lead to a bullish correction to the area of intermediate resistance at 1.3649. Moving averages are located there. They may somewhat limit the pair's upside potential. Only a breakout and test of this level from top to bottom may form an additional entry point for long trade. In such a case, the bearish trend may end, and the price may return to 1.3685. Yesterday, we saw the quote falling from this mark. Breaking above this range, GBP/USD is likely to rise to 1.3713, where it would be wise to lock in profits. If GBP/USD continues facing pressure in the first half of the day and there is no bullish activity around the 1.3615 support, I'd rather refrain from entering long positions against the trend. It would also be wise to buy the pound from 1.3575 after a false breakout. You should also consider opening long positions at 1.3530 or 1.3506, allowing a 15-20 pips intraday correction.

Short positions in GBP/USD:

Bears' main task is to protect the 1.3649 resistance. Bulls are likely to focus on this level in the first half of the day. A false breakout at this level together with disappointing composite PMI data in the UK may generate a good entry point for short trade. In such a case, the target is seen at the 1.3615 support. A breakout and test of this range from bottom to top will form an additional entry point for short trade and push GBP/USD to 1.3575 and the low of 1.3530, where it would be wise to lock in profits. If there is no bullish activity around 1.3649 in the first half of the day, you should refrain from selling the pair until the price reaches the 1.3685 resistance. There, short positions should be considered only after a false breakout. You may sell GBP/USD from 1.3713, allowing a 25-30 pips intraday correction.

Commitment of Traders report:

The COT report as of September 14 logged a sharp increase in net positions and long non-commercial positions, as well as a decrease in short ones. The pound sterling remains under pressure. A significant fall in the value of the trading instrument indicates rather high demand for long positions among large market players. The sharp rise in the UK's inflation in the previous week made many traders change their attitude towards the Bank of England's monetary policy. The fact that the regulator seems to be in no hurry to tighten its monetary policy impacts traders' activity. I suggest that you continue buying the pound sterling at any time it falls sharply. The lower the sterling is the more active buyers of risk assets who expect future changes in the BoE's monetary policy will be. The report also revealed a spike in long non-commercial positions to 44,161 from 29,348. At the same time, short non-commercial positions tumbled to 39,371 from 53,872. As a result, the non-commercial net position rose to 4,790 from -24,524 a week earlier. The closing price has not changed a lot since the previous week, 1.3837 against 1.3838 a week earlier.

Indicator signals:

Moving averages

Trading is carried out below 30- and 50-period moving averages, indicating the formation of a bearish trend.

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

Bollinger Bands

A breakout of the lower border of the indicator around 1.3605 is likely to lead to another fall in price. A breakout of the upper border around 1.3655 is expected to cause an increase in the value of the pound.

Indicators

• Moving average determines the current trend by smoothing volatility and noise. Period 50. Marked in yellow on the chart.
• Moving average determines the current trend by smoothing volatility and noise. Period 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands Period 20
• Non-commercial traders are speculators 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.
• Non-commercial short positions represent the total short open position of non-commercial traders.
• The total non-commercial net position is the difference between short and long positions of non-commercial traders.