GBP/USD: plan for the American session on November 5 (analysis of morning deals)

Trading 05 Nov 2020 Donner votre avis

To open long positions on GBPUSD, you need to:

Today's decision of the Bank of England to change monetary policy in terms of expanding the bond purchase program was not unexpected, however, the statements of the Bank's Governor, Andrew Bailey, gave optimism to traders who bet on further strengthening of the British pound. However, let's take a look at the morning deals and see where you can and should have entered. The 5-minute chart clearly shows how the resistance breakout of 1.2978 occurs after the decision of England, however, we were not able to wait for the test of this level from top to bottom to get a convenient entry point into long positions (the area where the test should have been marked on the chart). Then the bulls almost reached the resistance of 1.3043, where I recommended selling the pound. But even there, given that we fell just a couple of points short of this range, we were forced to skip the deal. Only a breakout of the resistance of 1.3043, followed by a top-down test, became a convenient entry point for long positions.

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At the moment, as long as the trade is conducted above the support of 1.3043, the buy signal will work. Therefore, the nearest target in this scenario will be the resistance of 1.3136, which coincides with the maximum of this week. However, the pound may not stop there either. Fixing above this range, similar to the morning purchase, forms a good signal for the continuation of the upward trend of GBP/USD with a return to the area of 1.3234, where I recommend fixing the profits. A more active movement of the pound up will occur only after the results of the presidential election and provided that Biden wins. In the scenario of a return of GBP/USD under the support of 1.3043 in the second half of the day, it is best to wait for a re-update of the area of 1.2976 and buy the pound there if a false breakout is formed. I recommend considering long positions immediately for a rebound only after returning to the support of 1.2914.

To open short positions on GBPUSD, you need:

The decision of the Bank of England supported the British pound, and the bears gave way to the resistance of 1.2976 and may now lose the area of 1.3043. Therefore, the primary task of the bears in the second half of the day will be to return the pound to the support level of 1.3043. However, it is possible to open short positions from it only after a breakdown and fixing under this range with a test from the bottom up. In this case, a repeated decline in GBP/USD to the minimum in the area of 1.2976 will be provided. It will be possible to talk about the pair returning to 1.2914 and updating the area of 1.2856, on which the entire bullish trend depends, only after the news of Donald Trump's election victory. In the scenario of further recovery of the pound, I recommend considering new short positions only after the formation of a false breakout in the area of 1.3136 or immediately on the rebound from the larger maximum of 1.3234, based on a correction of 20-30 points within the day.

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Let me remind you that in the COT reports (Commitment of Traders) for October 27, there was a reduction in both short and long positions. Long non-commercial positions fell from the level of 39,836 to the level of 31,799. At the same time, short non-commercial positions fell from 41,836 to 38,459. As a result, the negative non-commercial net position was at -6 660 against -2,000 a week earlier, which indicates that the sellers of the British pound retain control and their minimal advantage in the current situation.

Signals of indicators:

Moving averages

Trading is above 30 and 50 daily averages, which indicates that buyers are trying to take control of the market again.

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

If the pound declines, the lower border of the indicator around 1.2914 will act as support.

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 material has been provided by InstaForex Company - www.instaforex.com

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