21.03.202416:58 Forex Analysis & Reviews: GBP/USD: trading plan for the US session on March 21st (analysis of morning deals). The pound reacted by falling to the PMI index data

In my morning forecast, I pointed out the level of 1.2766 and planned to base market entry decisions on it. Let's look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout led to a buying entry point, resulting in a 20-point increase. However, the pressure on the pair returned as the released data from the UK showed nothing positive. The technical picture was reassessed for the second half of the day.

For opening long positions on GBP/USD, the following is required:

News that activity in the manufacturing sector of the UK and the services sector in March turned out to be worse than economists' forecasts exerted downward pressure on the British pound, which plunged today to levels from which it started to rise after the Federal Reserve meeting yesterday. The pound was also affected by the Bank of England's decision to keep rates unchanged, as I warned in the morning forecast. In the second half of the day, we await figures on the PMI index for the manufacturing sector, the PMI index for the services sector, and the composite PMI index for the US. Strong data will lead to a new decline in GBP/USD, which I plan to take advantage of. In case of a decline in the pair, only the formation of a false breakout around the nearest support at 1.2720, similar to what I analyzed earlier, will provide a suitable entry point for long positions, counting on a return of demand for the pound with the prospect of testing 1.2763 - a new resistance formed by the end of the first half of the day. A breakthrough and consolidation above this range will strengthen the bullish positions and open the way to 1.2800. The ultimate target will be a maximum of 1.2855, where I intend to make a profit. Buyers will lose their initiative if the pair declines and there is no bullish activity at 1.2720. In this case, only a false breakout around the next support at 1.2686 will confirm the correct entry point into the market. I plan to buy GBP/USD immediately on a rebound from the minimum of 1.2636 with a 30-35 point correction target within the day.

For opening short positions on GBP/USD, the following is required:

Bears control the market. In case of an attempt to rise, only a false breakout around the new resistance at 1.2763, slightly below the moving averages, will confirm the correct entry point for selling in continuation of the trend, leading to a downward movement towards 1.2720 - a support level that plays a fairly important role in the current trend. A breakthrough and bottom-up retest of this range will deliver another blow to buyer positions, leading to stop-loss triggering and opening the way to 1.2686. The ultimate target will be the area of 1.2636, where profits will be taken. Buyers will have a chance to build an upward trend in the scenario of a rise in GBP/USD and a lack of activity at 1.2763 in the second half of the day. In this case, I will postpone selling until a false breakout at 1.2800. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.2855, but only counting on a pair correction downwards by 30-35 points within the day.

In the COT report (Commitment of Traders) for March 12, there was an increase in both long and short positions. Despite expectations that rates in the UK may be lowered even if inflation does not reach the targeted 2.0%, demand for the British pound continues to be observed. The current correction in the pair is entirely due to sharp demand for the US dollar across the market, which is associated with the release of US inflation data last week. Rising prices for the third month will surely prompt the Federal Reserve to stick to a tight policy for as long as possible, which the market is reacting to now. The latest COT report states that long non-commercial positions increased by 21,006 to 123,285, while short non-commercial positions jumped by 8,940 to 52,834. As a result, the spread between long and short positions increased by 4,760.

Indicator Signals:

Moving Averages

Trading is conducted around the 30 and 50-day moving averages, indicating market uncertainty.

Note: The author considers the period and prices of moving averages on the hourly chart H1, which differs from the general definition of classical daily moving averages on the daily chart D1.

Bollinger Bands

In case of a decline, the lower boundary of the indicator will act as support around 1.2730.

Indicator Descriptions:

• 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 - speculators, such as individual traders, hedge funds, and large institutions, 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 positions of non-commercial traders.
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.