08.06.202112:55 Forex Analysis & Reviews: GBP/USD: plan for the US session on June 8 (analysis of morning trades)

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

The pressure on the British pound remained, and the pair fell to the area of large support of 1.4127, which I paid attention to in my morning forecast. To my regret, the test and the formation of a false breakout at this level did not come, so there were no signals to enter the market. The differences between the EU and the UK over compliance with the Brexit agreement and the likelihood of a later opening of the economy due to the new Indian strain of coronavirus put pressure on the pound in the absence of good fundamental statistics.

From a technical point of view, nothing has changed for buyers. Their main task for today is to keep under control the support of 1.4127, which they managed to protect yesterday in the first half of the day against the background of low volatility of the pair. Forming a false breakout at the level of 1.4127 forms a signal to open long positions in the expectation of a new upward trend for the pound and go beyond the side channel in which we have been since the end of last month. In this scenario, you can expect an update to the resistance of 1.4189. A breakout and a test of this area from top to bottom will open a direct road to new highs in the area of 1.4241, where I recommend taking the profits. If the pressure on the pound returns and the bulls do not show activity near the support of 1.4127, I recommend not to rush with purchases. The optimal scenario will be long positions immediately on the rebound from the support of 1.4085 or even lower – from the level of 1.4041 in the expectation of an upward correction of 25-30 points within the day.

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

The bears need to think about how to regain control of the support of 1.4127. In the first half of the day, we managed to get close to this level. However, it did not come to active actions on it, although there are also no people who want to buy GBP/USD from this level. A break and consolidation below this range with a reverse test of it from the bottom up will lead to the formation of an entry point into short positions in the expectation of a return of the pair to the support of 1.4085 and an exit to new lows in the area of 1.4041, where I recommend taking the profits. In the case of GBP/USD growth in the second half of the day after the data on the small business optimism indicator from the US NFIB and the foreign trade balance, the bears should focus on the formation of a false breakout in the resistance area of 1.4189, which forms a good entry point into short positions. Suppose sellers do not show any activity at this high. In that case, it is best to postpone sales until the update of the new resistance of 1.4241, where you can open short positions on the pound immediately on the rebound in the expectation of a downward correction of 20-25 points within the day. The level of 1.4241 is the upper limit of a wide side channel, the exit beyond which will determine the pair's further direction.

Let me remind you that the COT reports (Commitment of Traders) for June 1 recorded a minimal increase in long positions and a very large increase in short positions, which was proof of a sharp drop in the pound. Statements from the Bank of England representatives no longer work, as market participants need concrete actions, not promises. The risk of a later opening of the UK economy due to the spread of the Indian strain of coronavirus also creates several obstacles for buyers of the pound. However, as soon as the central bank begins to take inflation seriously and talk about changes in the volume of the asset purchase program, demand for GBP/USD will immediately return. Therefore, the best scenario is to buy at every good decline in the British pound against the US dollar. The COT report indicates that long non-commercial positions rose from the level of 64,193 to the level of 64,204. However, short non-commercial positions rose much stronger from 33,534 to 40,079, indicating the emergence of new sellers in the market after the pair reached another local high. As a result, the non-profit net position decreased from 30,659 to the level of 24,125. Last week's closing price changed to 1.42270 against 1.41553.

Signals of indicators:

Moving averages

Trading is conducted around 30 and 50 daily averages, which is more indicative of the sideways nature of the market.

Note: The period and prices of the 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 rises, the upper limit of the indicator in the area of 1.4195 will act as a resistance.

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 specific 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.