25.09.202415:47 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on September 25 (Review of Morning Trades)

In my morning forecast, I focused on the 1.3390 level to guide trading decisions. Let's review the 5-minute chart to analyze what occurred. The decline and formation of a false breakout around 1.3390 provided an excellent entry point to buy the pound. However, the pair failed to rise, resulting in realized losses. The technical outlook for the second half of the day remained unchanged.

To Open Long Positions on GBP/USD:

The absence of UK statistics has kept pound buyers cautious. It seems there are fewer traders willing to open long positions around the monthly high than anticipated yesterday. Weak U.S. new home sales data, along with dovish remarks from Federal Reserve member Adriana D. Kugler, could catalyze new long positions. If GBP/USD continues to decline—a possibility we cannot dismiss—I would only reconsider long positions after retesting the support at 1.3341. Forming a false breakout there, similar to the scenario analyzed earlier, will provide a chance for the pair to recover towards 1.3390. A breakout and retest from top to bottom of this range would strengthen the chances of an upward trend, leading to the triggering of sellers' stop orders and creating a suitable entry point for long positions, aiming for a target at 1.3425. The most distant target will be around 1.3468, where I plan to take profits. If GBP/USD declines and the bulls show no activity around 1.3341 in the second half of the day, the pressure on the pair will intensify, potentially leading to a further drop and retest of the support at 1.3341, where the moving averages are located. Only a false breakout there will serve as a suitable condition to open long positions. I plan to buy GBP/USD immediately on a rebound from the 1.3301 low, targeting a correction of 30-35 points intraday.

To Open Short Positions on GBP/USD:

Sellers are methodically recovering from yesterday's losses and are now clearly targeting the 1.3341 support, which could be easily tested if U.S. real estate market data outperforms economists' forecasts. However, we should not overlook the resistance at 1.3390, which earlier served as a rather weak support. In response to positive U.S. data, only a false breakout at 1.3390 will provide a suitable point to sell the pound, aiming for a further correction to the 1.3341 support. A breakout and retest from bottom to top of this range will impact buyers' positions, triggering stop orders and paving the way to 1.3301. The most distant target will be the 1.3262 level, where I will take profits. If GBP/USD rises and there is no bearish activity at 1.3390 in the second half of the day, which remains a possibility in the current bullish trend, buyers will continue pushing the pound higher. Bears will then have no choice but to retreat to the 1.3425 resistance area. I will sell there only after a false breakout. If there is no downward movement, I will seek short positions on a rebound around 1.3468, targeting a 30-35 point correction intraday.

The COT report for September 17 showed an increase in short positions and a decrease in long positions. Clearly, after the Bank of England decided to leave monetary policy unchanged, and following the Federal Reserve's rate cut, more traders have opted to buy the pound, although this is not yet reflected in the current report, so it should not be overly emphasized. However, the increase in short positions has not significantly impacted the medium-term upward trend. Therefore, the lower the pound falls, the more it will attract new buyers. The latest COT report indicates that non-commercial long positions decreased by 17,250 to 124,822, while non-commercial short positions increased by 10,059 to 61,843, reducing the gap between long and short positions by 342.

Indicator Signals:

Moving Averages:

Trading is conducted around the 30- and 50-day moving averages, indicating market uncertainty.

Bollinger Bands:

In case of a decline, the lower boundary of the indicator around 1.3370 will act as support.

Indicator Descriptions:

• Moving average: Determines the current trend by smoothing out volatility and noise. Period – 50, marked in yellow on the chart.
• Moving average: Determines the current trend by smoothing out volatility and noise. 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 certain 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: The difference between short and long positions of non-commercial traders.