18.11.202414:04 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on November 18th (Morning Trade Analysis) - The Pound Has Lost Direction

In my morning forecast, I identified 1.2643 as a key level for market entry decisions. The 5-minute chart highlights that the price rose but did not test or form a false breakout at this level. The technical outlook for the second half of the day remains unchanged.

Opening Long Positions on GBP/USD

The lack of UK economic data has led to low volatility and trading volumes. With no buyers in the morning session, the pair is likely to remain under pressure. For this reason, I will avoid buying even with the absence of significant U.S. data. Key events in the U.S. session include the NAHB housing market index and a speech by FOMC member Austin D. Goolsbee.

A decline and the formation of a false breakout around the support at 1.2599 would confirm a suitable entry point for long positions, targeting a recovery toward 1.2643. A breakout and retest of this range would confirm further buying opportunities, with potential targets at 1.2681 and 1.2723, where profits should be taken.

If GBP/USD falls further and there is no activity at 1.2599, the bearish trend will likely continue, opening the way toward 1.2560. A false breakout at this level would provide a condition for entering long positions. Alternatively, I will buy GBP/USD immediately on a rebound from 1.2520, targeting a 30-35 point intraday correction.

Opening Short Positions on GBP/USD

Given the pound's oversold condition, short positions will only be considered after an upward correction. A false breakout around the 1.2643 resistance level would provide an entry point for selling, targeting a drop to the monthly low at 1.2599. A breakout and retest from below this range would strengthen the bearish trend, exposing 1.2560 and ultimately 1.2520, where profits should be taken.

If GBP/USD rises and there is no activity at 1.2643, where moving averages favor sellers, buyers may attempt a larger correction early this week. In this scenario, I will delay selling until the pair tests resistance at 1.2681, where I will sell only after a failed breakout. If the price fails to move downward there, I will look for short positions near 1.2723, targeting a 30-35 point intraday correction.

The latest COT report (as of November 5) showed a decline in non-commercial long positions (-11,899 to 120,737) and a significant increase in short positions (+9,373 to 75,653). As a result, the net gap widened by 1,193 contracts. These figures, however, do not account for recent developments, such as the U.S. presidential election and the Bank of England's November rate cuts. Given the current strong pressure on risk assets, a short-term recovery for the pound seems unlikely.

Indicator Signals

• Moving Averages: Trading is below the 30 and 50-period moving averages on the H1 chart, signaling continued pound weakness.

Bollinger Bands: The lower boundary of the indicator, near 1.2600, will act as support in case of a decline.

Indicator Descriptions

• Moving Average (MA): Determines the current trend by smoothing volatility and noise.
  • 50-period (yellow on the chart).
  • 30-period (green on the chart).
• MACD (Moving Average Convergence/Divergence): Measures momentum and trend direction.
  • Fast EMA: 12-period.
  • Slow EMA: 26-period.
  • Signal Line (SMA): 9-period.
• Bollinger Bands: Identify volatility and potential support/resistance levels.
  • Period: 20.
• Non-commercial Traders: Speculators such as hedge funds, institutions, and individual traders using the futures market for speculation.
• Long Non-commercial Positions: The total long open positions held by non-commercial traders.
• Short Non-commercial Positions: The total short open positions held by non-commercial traders.
• Net Position: The difference between short and long positions held by non-commercial traders.