23.12.202417:17 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S.Session on December 23rd (Analysis of Morning Trades). Pound Drops on Weak Data

For Opening Long Positions on GBP/USD:

Weak GDP data from the UK, which showed no growth, quickly put pressure back on the pound, as expected. Ahead, critical U.S. statistics are set to be released, and if the U.S. Consumer Confidence Index beats economists' forecasts, the pound may decline further against the dollar. I plan to capitalize on this opportunity.

A false breakout around 1.2521 will provide a solid entry point for buying, aiming for a recovery to the 1.2560 resistance level. A breakout and retest of this range from above will offer a new entry point for long positions, targeting 1.2598, where buyers are likely to encounter difficulties. The farthest target will be the 1.2628 level, where I plan to take profits.

If GBP/USD declines and buyers show no activity around 1.2521, bulls will lose all initiative. In this case, only a false breakout near the next support at 1.2480, last week's low, will offer a suitable condition for opening long positions. I will consider immediate long positions on a rebound from the 1.2424 low, aiming for an intraday correction of 30–35 points.

For Opening Short Positions on GBP/USD:

Pound sellers have proven their presence, and now their hopes rest on strong U.S. statistics. If the data fails to impress or aligns with forecasts, bears will need to focus on defending the 1.2560 level, formed during the first half of the day. A false breakout and active defense of 1.2560 will justify adding short positions, extending the bearish trend. The target for a decline will be the 1.2521 level.

A breakout and retest of this range from below will trigger stop-loss orders, paving the way toward 1.2480, a significant blow to the bulls' positions. The farthest target will be 1.2424, where I plan to take profits.

If demand for the pound returns in the second half of the day following weak U.S. data and sellers fail to act around 1.2560—where moving averages favor bears—buyers will gain a chance for a fresh wave of growth. In this scenario, bears will likely retreat to the 1.2598 resistance level. I will sell there only after a failed consolidation. Immediate short positions on a rebound will be considered around 1.2628, targeting a downward correction of 30–35 points.

Commitment of Traders (COT) Report Highlights:

The COT report for December 10 showed a reduction in short positions and an increase in longs. However, the overall market dynamics remained unchanged, as many traders adopted a wait-and-see approach before the Bank of England's final meeting of the year.

• Long non-commercial positions increased by 4,707 to 102,763.
• Short non-commercial positions decreased by 3,092 to 75,638.

The gap between long and short positions expanded by 11,321.

Indicator Signals:

Moving Averages:

Trading near the 30- and 50-day moving averages indicates market uncertainty.

Note: Moving average periods and prices are based on the H1 hourly chart and differ from the classic daily D1 chart.

Bollinger Bands:

The lower boundary at 1.2535 serves as support in case of a decline.

Indicator Description:

• Moving Average (MA): Smooths out price volatility and noise.
  • Period: 50 (yellow on the chart).
  • Period: 30 (green on the chart).
• MACD (Moving Average Convergence/Divergence):
  • Fast EMA: 12
  • Slow EMA: 26
  • SMA: 9
• Bollinger Bands: Period 20
• Non-commercial traders: Speculators such as individual traders, hedge funds, and institutions using futures markets for speculative purposes.
• Long positions represent the total open long positions.
• Short positions represent the total open short positions.

Net position: Difference between short and long positions.