In my morning forecast, I highlighted the 1.3568 level and planned to use it to make market entry decisions. Let's take a look at the 5-minute chart to understand what happened. A false breakout around 1.3568 provided a good entry point for buying the pound, which led to a rise of more than 50 points in the pair. The technical outlook was revised for the second half of the day.
To open long positions on GBP/USD:
The British pound continued to see active buying, despite weak industrial order balance data from the Confederation of British Industry. Clearly, geopolitical events are currently providing more support to the pound than secondary economic indicators. However, the situation may shift in the second half of the day. Strong U.S. consumer confidence data and firm intentions by Fed Chair Jerome Powell to keep rates high could alter sentiment.
If GBP/USD declines, I prefer to act around the new support at 1.3590. A false breakout there would offer a good entry point for long positions, targeting a return to resistance at 1.3630 — the monthly high. A breakout and downward retest of this range would provide another long entry opportunity with the prospect of reaching 1.3652. The final target will be the 1.3683 level, where I plan to take profit.
If GBP/USD drops and there is no bullish activity around 1.3590 in the second half of the day, pressure on the pound could intensify. In this case, only a false breakout near 1.3562 would offer a suitable condition for buying. I plan to open long positions on a direct rebound only from the 1.3532 support level, aiming for a 30–35 point intraday correction.
To open short positions on GBP/USD:
Sellers haven't shown much strength so far, so be cautious with short positions even near current highs. If GBP/USD continues to rise following weak U.S. data, only a false breakout around 1.3630 will offer a valid entry point for short positions, targeting a decline toward 1.3590. A breakout and upward retest of this range would trigger stop-losses and open the path toward 1.3562. The final target will be the 1.3532 level, where I plan to take profit.
If demand for the pound holds in the second half of the day and bears do not assert themselves around 1.3630, a larger GBP/USD rally cannot be ruled out. In that case, it would be better to delay selling until a test of resistance at 1.3652. I will consider short positions there only after a failed breakout. If there is no downward movement there either, I will look for short entries on a rebound from the 1.3683 level, expecting an intraday correction of 30–35 points.
COT Report (Commitment of Traders) – June 17:
The report showed a rise in short positions and a decline in longs. The Fed's decision to keep rates unchanged had a favorable effect on the U.S. dollar, though the main driver of its strength remained the heightened tensions in the Middle East. U.S. economic growth data will soon be released and could influence the Fed's next steps. A key factor for the dollar's future trajectory will be Jerome Powell's interpretation of inflation and his outlook for possible rate cuts later this year.
The latest COT report showed that non-commercial long positions fell by 4,794 to 106,282, while non-commercial short positions rose by 3,983 to 63,425. As a result, the gap between long and short positions narrowed by 4,800.
Indicator Signals:
Moving AveragesTrading is taking place above the 30- and 50-period moving averages, indicating continued upward momentum for the pair.Note: The author uses the H1 (hourly) chart for these moving averages, which differ from the classical definitions used on the daily D1 chart.
Bollinger BandsIn case of a decline, the lower band near 1.3486 will act as support.
Indicator Descriptions:
- Moving Average – Indicates the current trend by smoothing volatility and noise.
- 50-period (yellow on chart)
- 30-period (green on chart)
- MACD (Moving Average Convergence/Divergence)
- Fast EMA – 12
- Slow EMA – 26
- Signal line (SMA) – 9
- Bollinger Bands – 20-period
- Non-commercial traders – Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes under certain regulatory classifications
- Long non-commercial positions – Total long open positions held by non-commercial traders
- Short non-commercial positions – Total short open positions held by non-commercial traders
- Net non-commercial position – The difference between short and long non-commercial positions
