19.05.202006:51 Forex Analysis & Reviews: GBP/USD: plan for the European session on May 19. COT reports (analysis of yesterday's trade). Pound buyers are gradually returning to the market. Breakout of 1.2218 is needed

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

In yesterday's forecast for the second half of the day, I paid attention to the pound strengthening above the 1.2117 level, and recommended opening long positions from there in the expectation of continued growth. In the 5-minute chart, you can see how a powerful bullish momentum led GBP/USD to break and consolidate in the second half of the day and above the resistance of 1.2170, which also became a buy signal, but the pound could be sold immediately to rebound from the resistance of 1.2225, which brought about 40 points after a downward correction by the end of the day. The Commitment of Traders (COT) report for 12 recorded growth in both short and long positions, which is a very interesting signal, since only short positions have been actively increasing over the past few weeks. It is quite possible that medium-term buyers are attracted to quite interesting lows, to which the pound has now returned. Today there will be regular speeches by the US Treasury secretary and Federal Reserve Chief Jerome Powell, who can maintain the demand for GBP/USD. The COT report indicated that short non-profit positions increased to 40,101 from 25,213 during the week, while long non-profit positions also increased from 28,096 to 31,525. As a result, the non-commercial net position became even more negative and turned out to be at the level of -13668, against - 12,001, which so far indicates the continuation of the bearish trend in GBP/USD. As for the intraday situation, the bulls need to break above the resistance of 1.2218 today, which shifted after yesterday's test of the high of 1.225. Consolidating this range can lead to the next wave of strengthening GBP/USD with the exit to the highs of 1.2272 and 1.2323, where I recommend taking profits. However, an important task of the bulls will be to form a false breakout in the support area of 1.2170, since only this will preserve the bullish momentum in the market. If there is no activity in this range, it is best to postpone long positions on the pound until the support test of 1.2122, or buy GBP/USD immediately for a rebound from the low of 1.2074 in the expectation of a correction of 30-40 points. However, it is worth understanding that a test of this area will completely block all bullish momentum.

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

Sellers of the pound will rely on weak fundamental statistics on the UK economy today, and in particular on a poor report on the labor market and the growth of average earnings, which will surely fall, which will increase pressure on the British pound and return demand for the US dollar. Forming a false breakout in the resistance area of 1.2218, or consolidating below the support of 1.2170 will be a direct signal to open short positions, which will lead to a larger sell-off of GBP/USD to the area of lows of 1.2122 and 1.2074, where I recommend taking profits. The test of the 1.2074 area is a clear sign that the pair will fall further. In case of growth above the resistance at 1.2218 first half of the day, it is best to defer short positions to the updates high of 1.2272, or to sell the pound immediately on the rebound from the resistance at 1.2323, based on a correction of 30-40 points by the end of the day.

Signals of indicators:

Moving averages

Trading is slightly above 30 and 50 moving averages, which indicates a possible slowdown of the bear market in the short term.

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

Bollinger bands

A break of the upper border of the indicator at 1.2225 will result in a new wave of pound growth. In the event of a decline, support will be provided by the lower border of the indicator in the area of 1.2145.

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 traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long nonprofit positions represent the total long open position of nonprofit traders.
• Short nonprofit positions represent the total short open position of nonprofit traders.
• The total non-profit net position is the difference between short and long positions of non-profit traders.