13.01.202208:21 Forex Analysis & Reviews: GBP/USD: plan for the European session on January 13. COT reports. Pound at new annual highs. Aim for 1.3730

To open long positions on GBP/USD, you need:

Yesterday there were no signals to enter the market, as we did not reach the indicated levels. Let's take a look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the 1.3613 level and advised you to make decisions on entering the market from it. Due to the very low trading volume and volatility, we did not wait for the test of the nearest support level of 1.3613. In this regard, it was not possible to get signals to enter the market. The lack of important fundamental statistics is also one of the reasons why the pound has been standing still. After the US inflation data was published in the afternoon, the bulls managed to surpass the resistance of 1.3664, however, a couple of points were missing before the reverse test of this level from top to bottom. For this reason, I did not wait for the entry point to long positions.

The upward trend continues and the bulls are not going to retreat yet. The bulls' main task for today is to protect the support of 1.3678, which was formed following yesterday's results. There are moving averages playing on the bulls' side at this level, which should also help the pound's bulls to cope with the pressure. Forming a false breakout at 1.3678 creates a buy signal with the prospect of continuing the bull market aimed at updating the new resistance at 1.3730. A breakthrough and a test of this level from top to bottom will give another entry point and strengthen the bulls' position in order to continue the growth of GBP/USD to the highs: 1.3771 and 1.3809. The 1.3842 level is a more distant target, which is where I recommend taking profits. Given that there are no important statistics on the UK today, the pressure on the pound may increase. In case GBP/USD falls during the European session and a lack of activity at 1.3678, it is best to postpone long positions to the level of 1.3624, from where it was possible to observe more aggressive actions from the bulls yesterday. To miss this area is tantamount to missing the initiative. Forming a false breakout at 1.3624 will provide an entry point while counting on a succeeding recovery from GBP/USD. You can buy the pound immediately on a rebound from 1.3566, or even lower - from a low like 1.3532, counting on a correction of 20-25 points within the day.

To open short positions on GBP/USD, you need:

Bears can't offer anything serious yet to influence the bullish trend. The only estimate for today's data on producer prices in the United States, but they may indirectly affect the pair 's direction and the high that will happen is a slowdown in the growth of GBP/USD. The bears' main task for today is to protect the resistance of 1.3730, which bulls will clearly aim for in the first half of the day. The pair's exit above this range will create a number of problems and lead to the continuation of the bullish trend. Today there are no important fundamental statistics on the UK and the focus will shift to statements from the Bank of England representatives. Forming a false breakout at the level of 1.3730 creates the first entry point into short positions against an upward trend, followed by a decline in the pair to the area of 1.3678, for which you will have to fight hard. There, in addition to everything else, there are moving averages that play on the bulls' side. Crossing 1.3678 and a reverse test from the bottom up will increase pressure on the pound and dump it to the next support of 1.3624. Only the consolidation and the reverse test of 1.3614 from the bottom up will give a new entry point into short positions with the prospect of a decline in GBP/USD by 1.3566 and 1.3532, where I recommend taking profits. If the pair grows during the European session and bears are weak at 1.3730, it is best to postpone short positions until the next major resistance at 1.3771. I also advise you to open short positions there only in case of a false breakout. It is possible to sell GBP/USD immediately for a rebound from a large resistance of 1.3809, or even higher - from a new high in the area of 1.3842, counting on the pair's rebound down by 20-25 points within the day.

I recommend for review:

The Commitment of Traders (COT) report for January 4 revealed a sharp increase in long positions and a reduction in short positions - which indicates an increase in the pound's appeal after the Bank of England raised interest rates at the end of last year. If you look at the overall picture, the prospects for the British pound look pretty good. The BoE's decisions continue to support buyers of risky assets in the expectation that the central bank will continue to raise interest rates this year, which will make the pound even more attractive. High inflation remains the main reason why the BoE will continue to tighten monetary policy. On the other hand, the US dollar also has support: inflation data in the US are expected this week, which, together with the recent report on the US labor market, will certainly force the Federal Reserve to act more aggressively. The first interest rate hikes are planned in the spring, which will make the US dollar more attractive. The COT report for January 4 indicated that long non-commercial positions rose 20,824 to the level of 25,980, while short non-commercial positions fell from the level of 78,510 to the level of 65,151. This led to a serious change in the negative non-commercial net position from -57,686 to -39,171. The weekly closing price rose from 1.3209 to 1.3482.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates further growth of the pound.

Moving averages

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

Bollinger Bands

In case of a decline, the lower border of the indicator at 1.3640 will act as a support. In case of growth, the upper border of the indicator in the area of 1.3745 will act as a resistance.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.