04.04.202416:43 Forex Analysis & Reviews: GBP/USD: trading plan for the US session on April 4th (analysis of morning deals)

In my morning forecast, I drew attention to the level of 1.2672 and planned to make decisions on market entry based on it. Let's take a look at the 5-minute chart and figure out what happened there. Growth occurred, but before the test, the formation of a false breakout around 1.2672 in the first half of the day fell short by a few points, so I didn't enter the market. The technical picture was slightly revised for the second half of the day.

To open long positions on GBP/USD, the following is required:

The UK services sector activity data did not differ significantly from economists' expectations, which kept demand for the British pound in the first half of the day, but it did not escalate into further development of the upward trend. Ahead of us, we have a series of important reports on the USA: figures on the weekly number of initial claims for unemployment benefits and the balance of trade. Weak labor market data could push the pound even higher. Soft statements from FOMC members such as Austan D. Goolsbee, Loretta Mester, and Thomas Barkin will also provoke new purchases of the pound. If pressure on the pair increases in the second half of the day, it is best to wait for the formation of a false breakout around the new support level of 1.2635, formed based on yesterday's results. This will provide an opportunity for a return of demand with the prospect of an update to 1.2672 - a new resistance level. Breaking through and consolidating above this range will strengthen the bull positions and open the way to 1.2707. The ultimate target will be a maximum of 1.2753, where I plan to make a profit. In the scenario of GBP/USD decline and the absence of activity from the bulls at 1.2635 in the second half of the day, the pair will return to decline, allowing sellers to regain market position. In this case, only a false breakout around the next support level of 1.2598 will confirm the correct entry point into the market. I plan to buy GBP/USD immediately on the rebound from the minimum of 1.2567, with the target of a 30-35 point correction within the day.

To open short positions on GBP/USD, the following is required:

Bears also have every chance of undermining the pound, but for this, good statistics from the USA and an uncertain position of the Fed representatives are needed. Today, I plan to act after defending the resistance of 1.2672, which we still need to reach in the first half of the day. A false breakout there will confirm the correct entry point for selling in the development of a downward correction after yesterday's bull market, which will lead to a downward movement to 1.2635, where the moving averages, playing on the bull side, are located slightly below. Breaking through and retesting this range from bottom to top will deal another blow to the bull positions, leading to the removal of stop orders and opening the way to 1.2598. I expect the appearance of major buyers there. The ultimate goal will be around 1.2567, where profit will be taken. In the scenario of GBP/USD rising and the absence of activity at 1.2672 in the second half of the day, as well as soft statements from Federal Reserve representatives regarding future interest rates, buyers will continue to build a new bull market. In this case, I will postpone sales until a false breakout occurs at the level of 1.2707. If there is no downward movement there, I will sell GBP/USD immediately on the rebound from 1.2753, but I am only counting on a pair correction down by 30-35 points within the day.

In the COT (Commitment of Traders) report for March 26, there was a sharp reduction in long positions and an increase in short ones. After the Bank of England meeting and statements by Governor Andrew Bailey, it became clear to everyone the regulator's dovish position, to which the pound reacted with a decline. Most likely, the bear market trend will continue further because, despite Fed Chairman Jerome Powell's inclination toward a dovish policy, many of his colleagues advocate for a more restrained approach, which keeps the chances for a strong US dollar. For this reason, I am betting on a further decline in the pair. The latest COT report states that long non-commercial positions decreased by 11,344 to 91,261, while short non-commercial positions increased by 6,686 to 56,091. As a result, the spread between long and short positions decreased by 1,690.

Indicator signals:

Moving averages

Trading is conducted above the 30 and 50-day moving averages, indicating further pair growth.

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

Bollinger Bands

In case of decline, the lower boundary of the indicator will act as support around 1.2640.

Description of indicators:

• Moving average (smooths out volatility and noise, determining the current trend). Period - 50. Marked on the chart in yellow;

• Moving average (smooths out volatility and noise, determining the current trend). Period - 30. Marked on the chart in green;

• 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 using the futures market for speculative purposes and meeting certain requirements;

• Long non-commercial positions represent the total long open positions 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 the short and long positions of non-commercial traders.