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GBP/USD: plan for the US session on January 6 (analysis of morning deals). The sellers tried – nothing came out either


Relevance up to 11:00 2022-01-07 UTC+00

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

In my morning forecast, I paid attention to the 1.3510 level and recommended making decisions on entering the market from it. Let’s take a look at the 5-minute chart and figure out the entry points. If yesterday’s attempts by bulls to gain a foothold at new highs were unsuccessful, today the same scenario awaited the sellers of the pound. A breakthrough and consolidation below 1.3510 with a reverse test from the bottom up of this level gave an excellent signal to sell the pound. As a result, the downward movement was about 25 points and that was the end of it. The bulls quickly rehabilitated themselves and took control of 1.3510 even before lunch, forming an excellent entry point into purchases after the test from the top to the bottom of this level, which are valid at the time of writing – the pair went up about 25 points. The technical picture has changed slightly for the second half of the day. And what were the entry points for the euro this morning?

The primary task of buyers for today remains the protection of the new support 1.3497. This level is very important, as its breakdown can force traders to take profits from the highs, which will lead to the formation of another pressure on the pound and move trading within the wide side channel 1.3431-1.3595. The formation of a false breakdown at 1.3497 forms a buy signal for GBP/USD with the prospect of continuing the bull market aimed at breaking 1.3547. A breakdown and a test of this level from top to bottom, together with strong data on the number of initial applications for unemployment benefits in the US and the ISM business activity index in the service sector, will give an additional entry point and strengthen the position of buyers to continue building a bullish trend and update the highs: 1.3595 and 1.3649. A more distant target will be the 1.3694 area, where I recommend fixing the profits. However, such a large growth can be counted on only with the publication of very weak data on the American economy. In the scenario of a decline in the pound during the US session and a lack of activity at 1.3497, it is best to postpone purchases to the level of 1.3461. Only the formation of a false breakdown there will give an entry point in the expectation of maintaining bullish momentum. You can buy GBP/USD immediately on a rebound from 1.3431, or even lower – from a minimum of 1.3409, counting on a correction of 20-25 points within a day.

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

The bears did everything possible to build a larger downward correction of the pair, but there are quite a lot of people willing to buy the pound with any good decline, which did not allow them to break through to the lows of last week. While trading is below 1.3547, we can count on a larger decline in the pair. The primary task of bears today remains the protection of this range. Taking into account the release of several important fundamental statistics for the United States, and we are talking about data on the labor market and the service sector, only the formation of a false breakdown at this level forms the first entry point into short positions with a repeated decline of the pair to the area of 1.3497. A breakdown of this level and a reverse test from the bottom up, by analogy with the one I described above, will increase pressure on the pound and dump it to the next support of 1.3461. Only the consolidation and reverse test of this area will give a new entry point into short positions with the prospect of a decline in GBP/USD by 1.3431 and 1.3409, where I recommend fixing the profits. If the pair grows during the American session and sellers are weak at 1.3547, it is best to postpone sales to a larger resistance at the base of the 36th figure. I also advise you to open short positions there only in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound from a large resistance of 1.3649, or even higher – from a new maximum in the area of 1.3694, counting on the pair’s rebound down by 20-25 points inside the day.

In the COT reports (Commitment of Traders) for December 28, a reduction in both short and long positions was recorded. Considering that long positions have shrunk much more – this has only increased the negative value of the delta. The data take into account the meeting of the Federal Reserve System and the Bank of England, however, we remember that the pound declined strongly after the rapid growth that occurred due to the increase in interest rates. If you look at the overall picture, the prospects for the British pound look pretty good. The Bank of England’s decision to raise interest rates continues to fuel the markets with new buyers, and a more aggressive policy of the regulator next year will certainly strengthen the bullish trend for the GBPUSD pair. High inflation remains the main reason why the Bank of England will continue to raise interest rates. On the other hand, the US dollar also has supported: The Federal Reserve system plans to raise interest rates in the spring of next year, which makes the US dollar more attractive. The COT report for December 21 indicated that long non-commercial positions fell from the level of 29,497 to the level of 20,824, while short non-commercial positions fell from the level of 80,245 to the level of 78,510. This led to an increase in the negative non-commercial net position from -50,748 to -57,686. The weekly closing price has hardly changed: 1.3209 versus 1.3213 a week earlier.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which preserves the chance of a downward correction of the pound according to the intraday trend.

Note: The period and prices of 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 case of a decline in the pair, the average border of the indicator around 1.3497 will act as support. A breakthrough of the upper limit of the indicator in the area of 1.3595 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 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.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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EUR/USD: trading plan for American session on January 6. Overview of morning trading. Bulls protect 1.1300, betting on EUR

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