18.02.202514:00 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on February 18th (Review of Morning Trades)

In my morning forecast, I focused on the 1.2627 level as a key point for market entry decisions. Looking at the 5-minute chart, the pair moved higher but failed to reach 1.2627, leaving me without suitable entry points. The technical outlook remains unchanged for the second half of the day.

To Open Long Positions on GBP/USD:

Mixed UK labor market data prevented the pound from extending its gains. While unemployment remained unchanged, the number of new jobless claims doubled compared to forecasts. The US session is unlikely to bring major surprises. The Empire Manufacturing Index and NAHB Housing Market Index are unlikely to have a significant impact, nor is the speech by FOMC member Michael S. Barr. The best approach is to wait for the outcome of Ukraine-related negotiations and the market's reaction before making any decisions.

If the pair declines, buyers will need to defend the 1.2580 support level, which I consider a key area. I will enter long positions after a false breakout at this level, aiming for a rise toward 1.2627 resistance, which formed at the end of last week. A break and retest from above would provide a new entry point for longs, targeting 1.2664, further strengthening the bullish outlook. The final target will be 1.2692, where I plan to take profits.

If GBP/USD falls further and bulls show no activity around 1.2580, it will increase selling pressure. In this case, I will wait for a false breakout at 1.2550 before considering new long positions. A direct buy from 1.2515 will be an option only for a 30-35 point intraday correction.

To Open Short Positions on GBP/USD:

Sellers of the pound failed to act, as there was no clear catalyst for selling. The initial bullish move lost momentum on its own. Until further news on negotiations emerges, range-bound trading is likely to continue, which I will try to take advantage of.

A false breakout at 1.2627 resistance would provide a selling opportunity, with a target at 1.2580, where moving averages are positioned in favor of the bulls. A break and retest of this level from below could trigger stop-losses, pushing the pair toward 1.2550. The final downward target will be 1.2515, where I plan to take profits.

If GBP demand remains strong in the second half of the day, especially after a Fed speech, and sellers fail to defend 1.2627, the pair will likely continue rising. In this scenario, I will delay short positions until 1.2664. I will only enter shorts after a failed breakout attempt at this level. If no downward movement occurs, I will consider selling from 1.2692, targeting a 30-35 point correction.

Commitment of Traders (COT) Report:

The COT report from February 11 showed a decline in both long and short positions. However, the number of pound buyers increased sharply. It's important to note that this report does not reflect the phone conversation between Putin and Trump, so its significance should not be overstated. The first meeting between these leaders likely changed market sentiment in favor of buyers, which is evident in the increased demand for risk assets.

At the moment, the US dollar remains weak, especially when compared to the moderate fundamental data coming from the US. The latest COT report shows that long non-commercial positions rose by 3,645 to 69,087, while short positions declined by 4,510 contracts to 72,255. As a result, the spread between long and short positions increased by 4,914.

Indicator Signals

Moving Averages

The pair is trading around the 30- and 50-day moving averages, signaling market uncertainty.

Bollinger Bands

If the price declines, the lower boundary of the indicator around 1.2590 will act as support.

Indicator Descriptions:

• Moving Averages (MA): Identify trends by smoothing volatility and market noise.
• MACD Indicator: Measures the convergence/divergence of moving averages to detect potential trend reversals.
• Bollinger Bands: Gauge market volatility and indicate overbought/oversold conditions.
• Non-commercial Traders: Speculators such as hedge funds and institutions that use futures markets for speculation.
• Net Non-commercial Position: The difference between short and long positions held by speculative traders.