GBP/USD: Plan for the European Session on December 24. The Pound Continues to Reach New Highs

[Ben Graham]

Yesterday, only one entry point into the market was formed. Let's take a look at the 5-minute chart and analyze what happened. In my morning forecast, I focused on the 1.3490 level and planned to make decisions based on it. The rise and breakout at 1.3490 occurred without a retest, so I was unable to get an entry point for long positions. In the second half of the day, a false breakout around 1.3481 provided a buying opportunity for the pound, resulting in a gain of more than 30 pips.

For Opening Long Positions on GBP/USD:

Yesterday's reaction to the US GDP data, which strengthened the US dollar, was short-lived, and buyers of the pound quickly capitalized on it, turning the market in their favor. As a result, we are now observing a new monthly high. The further upward potential of the GBP/USD pair may continue during the European session since there are again no significant fundamental data from the UK, which will favor buyers. In the case of a slight downward correction, I expect the first signs of buyers to appear around the support level of 1.3508. A false breakout there would be a good opportunity to open long positions, targeting further growth towards the resistance at 1.3554. A breakout and retest of this range from above will increase the chances of strengthening GBP/USD, which would lead to the triggering of stop orders by sellers and provide an appropriate entry point for long positions with the potential to reach 1.3590. The furthest target will be the 1.3622 area, where I plan to take profits. If GBP/USD declines and there is no activity from buyers at 1.3508, pressure on the pair will increase, leading to movement towards the next support level of 1.3478. Only a false breakout there would be a suitable condition for opening long positions. I plan to buy GBP/USD immediately on a bounce from the low of 1.3447, targeting a correction of 30-35 pips within the day.

For Opening Short Positions on GBP/USD:

Pound sellers have shown some activity, but they have been unable to maintain control over the market, even in the face of such strong reports, suggesting further development of the bullish trend. For this reason, caution is advised when considering selling. If the pair continues to rise, bears can be expected at the 1.3554 resistance level. A false breakout there will provide a reason to sell GBP/USD, targeting a drop towards the support level of 1.3508, where the moving averages, which favor the bulls, are located. A breakout and retest from below this range after weak data will deal a more significant blow to buyer positions, leading to the triggering of stop orders and opening the pathway to 1.3478. The furthest target will be the 1.3447 area, where I will take profits. If GBP/USD continues to rise and bears do not act at 1.3554, buyers will continue to build the trend, potentially leading to a surge towards 1.3590. I plan to open short positions there only after a false breakout. If there is no downward movement even at that level, I will sell GBP/USD immediately on a bounce from 1.3622, but only in anticipation of a correction of 30-35 pips down within the day.

Recommendations for Further Reading:

Due to the US government shutdown, fresh Commitment of Traders (COT) data is not being published. As soon as the current report is prepared, we will publish it immediately. The latest available data is from December 9.

In the latest COT report, there was an increase in both long and short positions. The report indicates that long non-commercial positions rose by 8,067 to 60,319, while short non-commercial positions increased by 3,402 to 135,834. Consequently, the spread between long and short positions increased by 23,795.

Indicator Signals:

• Moving Averages: Trading is occurring above the 30-day and 50-day moving averages, indicating growth for the pound.
• Note: The period and prices of the moving averages are considered by the author on the hourly H1 chart and differ from the general definition of classical daily moving averages on the daily D1 chart.
• Bollinger Bands: In the event of a decline, the indicator's lower boundary around 1.3478 will serve as support.

Description of Indicators

• Moving Average (Period 50): Indicates the current trend by smoothing volatility and noise; marked in yellow on the chart.
• Moving Average (Period 30): Indicates the current trend by smoothing volatility and noise; 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, including individual traders, hedge funds, and large institutions, using the futures market for speculative purposes and meeting certain requirements.
• Long Non-Commercial Positions: Represents the total long open position of non-commercial traders.
• Short Non-Commercial Positions: Represents the total short open position of non-commercial traders.
• Net Non-Commercial Position: The difference between short and long positions of non-commercial traders.

The material has been provided by InstaForex Company - www.instaforex.com