28.10.202108:47 Forex Analysis & Reviews: GBP/USD: plan for the European session on October 28. COT reports. Active struggle in the market: bulls are aiming to surpass 1.3755, bears disagree with this

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

Yesterday was a difficult day for trading. Let's take a look at the 5 minute chart and understand the trades. In the first half of the day, one signal to buy the pound was formed, but it did not bring profit. The formation of a false breakout in the 1.3747 area formed a good entry point to long positions in order to restore the pound and slow down the downtrend, but this was not enough. After a slight growth, a repeated test of 1.3747 and then a breakout took place. The sharp fall of the pound to the 1.3711 area was without a reverse correction to 1.3747, so I did not manage to get a convenient entry point for short positions. In the second half of the day, the bears failed to protect 1.3735 and after the breakout, this level was tested from top to bottom, which formed the entry point to long positions. But, to my regret, no large upward trend was built from there, and trading continued around this range until the end of the day.

Today we do not have important statistics for the UK, so the whole emphasis will be on traders' reaction to the fundamental data on the US economy, which will be released in the afternoon. The GBP/USD pair's direction now depends on the growth rate of US GDP for the third quarter. As I noted above, the bulls will aim for resistance at 1.3755, where the moving averages are located, playing on the side of the bears. Only a breakthrough and reverse test from top to bottom of this level will provide an entry point to long positions, which will allow the bulls to get out to the equally important level of 1.3779. A breakthrough of this range will open the possibility for GBP/USD to return to the area of weekly highs to 1.3802 and 1.3827, where I recommend taking profits. In case the pair falls in the first half of the day, an equally important task for the bulls is to protect support at 1.3724. Forming a false breakout there will retain a chance for a further upward correction of the pair within the day. If the bulls are not active in the 1.3724 area, the best option for buying the pound will be the test of the next support at 1.3696. However, I advise you to open long positions there only after a false breakout. I advise you to watch buying GBP/USD immediately for a rebound only from the low of 1.3666, or even lower - from the support of 1.3632, counting on a correction of 25-30 points within the day.

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

The bears still have a great chance to break the upward trend, but for this they need to try to protect the resistance at 1.3755. Forming a false breakout there will result in creating a sell signal, which will push the pair to the intermediate support of 1.3724, formed in today's Asian session. A breakthrough of 1.3724 and a reverse test from the bottom up will create a signal to open new short positions in hopes that the pair would fall to 1.3696, and the next target will be the area of 1.3666 - this will finally finish off the bulls. I recommend taking profit there. If GBP/USD recovers and the bears are not active at 1.3755, I recommend selling the pound only after another false breakout from a large resistance at 1.3779. I advise you to open short positions immediately on a rebound from the level of 1.3802, or even higher - from the high of this week in the area of 1.3827, 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 October 19 revealed that short positions decreased while long positions increased, which reflects the upward trend in the pound, observed in the middle of this month. This resulted in the return of the net position of a positive value. Speeches and statements of representatives of the Bank of England claiming that it is necessary to take inflationary pressures more seriously also add to the bulls' confidence. BoE Governor Andrew Bailey's speech last week was well received in the market as he reiterated his stance on changing monetary policy. However, a slight slowdown in monthly and annual inflation growth in the UK limited the pair's upward potential in the middle of the week, which resulted in it being locked in the horizontal channel. I advise you to count on further strengthening of the pound and take advantage of any short-term decline that may occur in case of weak fundamental statistics. The COT report indicated that long non-commercial positions rose from 46,794 to 49,112, while short non-commercials dropped from 58,773 to 47,497. This led to a change in the non-commercial net position from negative to positive. The delta was 1615, against 11,979 a week earlier. The closing price of GBP/USD increased significantly: from 1.3591 to 1.3735.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which maintains pressure on the pound in the short term.

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

A breakthrough of the lower border of the indicator in the area of 1.3724 will lead to a fall in the pound. A breakthrough of the upper border of the indicator in the area of 1.3755 will form a new upward wave.

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.