01.10.202108:27 Forex Analysis & Reviews: GBP/USD: plan for the European session on October 1. COT reports. Pound bulls have shown the first signs of life. Their target for today is the resistance of 1.3482

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

Yesterday was quite an interesting and profitable day for trading the British pound. Let's take a look at the 5 minute chart and figure out all the entry points. It is clearly seen how the decline in the first half of the day to the level of 1.3419, which happened, by the way, after the release of good data on UK GDP, resulted in forming a false breakout and a signal to open long positions, which I drew attention to in the morning forecast. Then the rise to resistance of 1.3466 took place, where the bears clearly declared themselves, having formed an excellent entry point into short positions in continuation of the trend on a false breakout. The downward movement was more than 35 points. In the afternoon, the bulls are trying to break through the resistance of 1.3466 and test it from top to bottom, which provides an excellent entry point into long positions in continuation of the upward correction and leads to a renewal of resistance at 1.3505. Failure to consolidate and a false breakout at this level form an entry point for short positions, after which the pound falls by 50 points.

The PMI index for the manufacturing sector for September this year will be released today, which will do little to help the bulls. A breakthrough and consolidation above the resistance of 1.3482, which they rested against yesterday at the end of the day. A breakthrough of this level and a reverse test of it from top to bottom by analogy with the entry point, which I analyzed above from the level of 1.3466, will lead to forming a signal to buy GBP/USD in order to continue the upward correction to the high of 1.3544, where I recommend taking profits. The next target will be the area of 1.3586. The fact that trading is carried out in the area of the moving averages once again confirms the likelihood of continuing the upward correction in the pound, if suddenly there are no important political events in the US that affect the sentiment of buyers of risky assets. In case GBP/USD falls in the first half of the day, it is necessary to pay attention to the level of 1.3419, which is this year's low. Only a false breakout there generates a signal to open long positions against the trend with the expectation of a recovery to 1.3482. If the GBP/USD pair falls further in the morning following the trend, it is best not to rush with long positions. The optimal scenario would be buying the pound from the low of 1.3372, but subject to the formation of a false breakout. I advise you to open long positions in GBP/USD immediately on a rebound in the 1.3308 area, or even lower - from 1.3193 with the aim of an upward correction of 15-20 points within the day.

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

The initial challenge for the bears is to protect the resistance at 1.3482, which can be tested in case of very good data on activity in the UK manufacturing sector, especially in the event of forming an upward correction in the pair, which we could see yesterday. Only a false breakout of this level can seriously harm the plans of bulls who are counting on the pound's succeeding growth. If the bears manage to defend the above level, in this case, we can expect a further decline in GBP/USD along the trend to the area of the annual low of 1.3419. A breakthrough and reverse test of this area from the bottom up together with weak UK data and a worsening situation with the fuel and milk crises - all this will hit the next stop orders of the bulls and form an additional entry point into short positions with the aim of pulling down GBP/USD to 1.3372. With very active short positions on the pound, the next target for the bears will be the lows of 1.3308 and 1.3193, where I recommend taking profits. If the bears are not active in the 1.3482 area, the bears may start having minor problems. It is best to postpone selling until the next major resistance at 1.3544, from where you can sell GBP/USD immediately on a rebound, counting on a downward correction of 25-30 points within the day.

The Commitment of Traders (COT) reports for September 21 revealed both a sharp rise in short ones and an increase in those who bet on the pound's further growth. The Bank of England's monetary policy meeting last week had a significant impact on the sentiment of risky asset buyers. The decision to raise rates in November this year will provide support to bulls in case of any serious downward corrections in the pair, so it is best to bet on the growth of GBP/USD in the medium term. Deterioration in inflationary matters may force the BoE to act more aggressively, which is also another signal to buy the pound. The only problem that stands in the way of the bulls is the Federal Reserve, although it is not going to raise interest rates yet, but is also following the path of tightening monetary policy. The lower the pound falls, the more active buyers of risky assets will be, betting on real changes in the BoE's monetary policy in the future. The COT report indicated that long non-commercial positions rose from 44,161 to 51,910, while short non-commercials jumped almost one and a half times from 39,371 to 52,128, leading to a complete surrender of the bulls' advantage in the market and preponderance towards the bears. As a result, the non-commercial net position returned to its negative value and dropped from the level of 4,790 to the level of -218. The closing price of GBP/USD dropped 1.3837 to 1.3662 last week.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates an attempt by the bulls to stop the downward trend.

Moving averages

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

Bollinger Bands

A breakthrough of the upper border of the indicator in the area of 1.3482 will lead to a new wave of growth of the pound. Surpassing the lower border in the area of 1.3440 will increase the pressure on the pair.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial 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 short and long positions of non-commercial traders.