29.08.202414:06 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on August 29 (Morning Trade Analysis)

In my morning forecast, I focused on the level of 1.3226 and planned to make trading decisions based on it. Let's review the 5-minute chart to analyze what happened. The rise and formation of a false breakout at this level provided an entry point for selling the pound, triggering a decline of over 60 points. For the afternoon session, the technical picture was slightly revised.

To Open Long Positions on GBP/USD:

Data on initial jobless claims, GDP changes for the second quarter, and pending home sales could lead to a spike in volatility, but only strong figures will allow the pound to fall again to the new support level at 1.3170. Speeches by FOMC member Raphael Bostic will also be in focus for traders. A false breakout around 1.3170 will offer an entry point for long positions, anticipating a rise to the resistance level at 1.3221, which has so far been unattainable. A breakout and a retest from above of this range will strengthen the chances for an upward trend, potentially triggering sellers' stop orders and providing a suitable entry point for long positions with a potential rise to 1.3260. The ultimate target will be the area around 1.3300, where I plan to take profit. If GBP/USD continues to decline and bullish activity is absent at 1.3170 in the afternoon—considering this level has already been tested once today—the pressure on the pair will increase significantly. This will also lead to a drop and a test of the next support at 1.3144. Only a false breakout will be a suitable condition for opening long positions. I plan to buy GBP/USD immediately on a rebound from the low of 1.3108, aiming for a 30-35 point upward correction within the day.

To Open Short Positions on GBP/USD:

Sellers continue to apply pressure on the pound, and their main task now will be to break through the significant support at 1.3170, especially if strong U.S. statistics are released. If the figures disappoint, defending 1.3221 will become a priority. A false breakout at this level will be an acceptable signal to open short positions against the trend, targeting a correction and a test of the support at 1.3170. A breakout and a retest from below of this range will hit buyers' positions, potentially triggering stop orders and opening the path to 1.3144, where I expect more active actions from major players. The ultimate target will be the 1.3108 level, where I will take profit. Testing this level will lead to a significant downward correction of the pair, putting the continuation of the bullish market for the pound at risk. If GBP/USD rises and there is no activity at 1.3221 in the afternoon—where the moving averages are also positioned on the sellers' side—the only option would be to retreat to the resistance area at 1.3260, coinciding with the monthly high. In this case, I will postpone selling until a false breakout at the 1.3300 level. If there is no downward movement, I will sell GBP/USD immediately on a rebound from 1.3340, but only with the expectation of a 30-35 point downward correction within the day.

In the COT (Commitment of Traders) report for August 20, there was a sharp increase in long positions and a slight reduction in short positions. This clearly shows that more and more people are betting on the pound's rise, which demonstrated one of the strongest strengthening streaks recently. The market is not deterred by the fact that the Bank of England plans to continue lowering interest rates, as everyone is confident in the more aggressive easing policy of the US Federal Reserve. Thus, it is more about the weakness of the U.S. dollar rather than the strength of the pound, with ongoing problems expected to persist, especially with the inflation statistics expected this week. The latest COT report indicates that long non-commercial positions jumped by 23,031 to 125,634, while short non-commercial positions increased by 3,332 to 58,123. As a result, the gap between long and short positions widened by 3,517.

Indicator Signals:

Moving Averages:

Trading is below the 30-day and 50-day moving averages, indicating a potential decline for the pair.

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

Bollinger Bands:

In the event of a decline, the lower band of the Bollinger Bands around 1.3170 will act as support.

Indicator Descriptions:

• Moving Average: (Smoothing volatility and noise to define the current trend). Period 50. Marked in yellow on the chart.
• Moving Average: (Smoothing volatility and noise to define the current trend). Period 30. Marked in green on the chart.
• MACD Indicator: (Moving Average Convergence/Divergence). Fast EMA period 12. Slow EMA period 26. SMA period 9.
• Bollinger Bands: Period 20.
• Non-commercial Traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
• Long Non-commercial Positions: Represent the total long open positions of non-commercial traders.
• Short Non-commercial Positions: Represent the total short open positions of non-commercial traders.
• Net Non-commercial Position: Represents the net difference between short and long positions of non-commercial traders.