07.10.202415:30 Forex Analysis & Reviews: GBP/USD: Trading Plan for the U.S. Session on October 7 (Analysis of Morning Trades). The Pound Has Fallen Even Lower

In my morning forecast, I focused on the level of 1.3060 and planned to make trading decisions based on this level. Let's take a look at the 5-minute chart and analyze what happened there. The decline and the formation of a false breakout at 1.3060 provided a buying point for the pound, resulting in a rise of more than 30 points. The technical picture was slightly revised for the second half of the day.

To open long positions on GBP/USD:

The update of the weekly low, even in the absence of significant statistics from the UK, indicates the presence of major sellers and the continuation of the bearish trend. Given that in the second half of the day we will only hear from FOMC members Michelle Bowman and her colleague Neel Kashkari, pressure on the pound may persist. For this reason, it's better not to rush into purchases. Only the formation of a false breakout around 1.3060, similar to what I described above, will provide a chance for the pair to recover towards 1.3103, which was formed during the first half of the day. A breakout and a reverse test from top to bottom of this range will strengthen the chances of developing an upward trend at the beginning of the week, leading to the triggering of stop orders from sellers and creating a suitable entry point for long positions, potentially reaching 1.3144. The most distant target will be the level of 1.3190, where I plan to take profits. In the scenario of a decline in GBP/USD and a lack of activity from buyers at 1.3060 in the second half of the day, which is more likely to happen, pressure on the pair will increase. This will also lead to a decline and the updating of support at 1.3033. Only the formation of a false breakout will be a suitable condition for opening long positions. I plan to buy GBP/USD on a rebound from the low of 1.3003 with a target correction of 30-35 points within the day.

To open short positions on GBP/USD:

Sellers will reveal themselves in case of a rise in the pair near the resistance of 1.3103, provided that statements from American politicians carry rather cautious wording regarding future actions of the Fed on interest rates. The formation of a false breakout at 1.3103 will be a suitable option for opening short positions with the aim of falling to support at 1.3060. A breakout and a reverse test from bottom to top of this range will deal a blow to buyer positions, triggering stop orders and opening the way to 1.3033. The most distant target will be the level of 1.3003, where I plan to take profits. Testing this level will strengthen the bearish market. In the scenario of an increase in GBP/USD and a lack of activity at 1.3103 in the second half of the day, buyers will attempt to recoup part of the decline. The bears will have no choice but to retreat to the resistance area of 1.3144. I will only sell there on a false breakout. If there is no downward movement at 1.3190, I will look for short positions on a rebound around that level, but only in anticipation of a downward correction of the pair by 30-35 points within the day.

In the COT report (Commitment of Traders) for September 24, there was an increase in both short and long positions. It is evident that after the Bank of England's decision to keep monetary policy unchanged and the Federal Reserve's decision to lower interest rates, buyers of the pound are increasing day by day. The chances that the U.S. Central Bank will continue a dovish policy only fuel purchases of risk assets, pushing the dollar down. Statements from representatives of the Bank of England affirming that the economy is strong and doing well also contribute to the influx of new traders betting on the medium-term strengthening of the pound. The latest COT report indicates that long non-commercial positions increased by 30,503 to a level of 155,325, while short non-commercial positions rose by 6,490 to a level of 68,333. As a result, the gap between long and short positions increased by 759.

Indicator Signals:

Moving Averages

Trading is taking place below the 30-day and 50-day moving averages, indicating further decline of the pair.

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

Bollinger Bands

In the case of a decline, the lower boundary of the indicator around 1.3060 will serve as support.

Description of Indicators:

• Moving Average (MA) determines the current trend by smoothing out volatility and noise. Period 50. Marked in yellow on the chart.
• Moving Average (MA) 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 are speculators, such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific 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 the short and long positions of non-commercial traders.