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FX.co ★ GBP/USD: plan for the European session on February 25. COT reports. Bears hit the pound, but failed to keep the market under their control

GBP/USD: plan for the European session on February 25. COT reports. Bears hit the pound, but failed to keep the market under their control

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

Quite a lot of signals to enter the market appeared yesterday. Let's take a look at the 5-minute chart and talk about where the pound could and should have been sold. In my morning forecast I drew attention to resistance at 1.4186 and advised you to act based on this level. The chart clearly shows how the bears are forming a false breakout at 1.4186 and bringing the pair back under this range. This level was initially tested from the bottom up, which creates a signal to open short positions. But even if you did not orient yourself, the pound was significantly under pressure after this area was tested again. As a result, the bears got their way, pulling the pound to support 1.4119, where I recommended taking profits. The downward movement was more than 50 points. A small rebound from the 1.4119 level led to a correction by 20 points, however, it was not possible to wait for a signal to enter the market there. The bears managed to surpass 1.4119 in the afternoon. Testing it from the bottom up created another sell signal. And although the pair did not reach the target va

GBP/USD: plan for the European session on February 25. COT reports. Bears hit the pound, but failed to keep the market under their control

Important fundamental statistics on the UK will not be released today, so buyers of the pound can count on the succeeding strengthening of the pair. The optimal scenario for opening long positions in continuing the bull market is to form a false breakout in the support area of 1.4119, just below which the moving averages pass, playing on the side of buyers. In this case, we can expect a new wave of growth for the pound and a return to the 1.4186 area, above which it was not possible to break through yesterday. The pair's succeeding growth depends on whether the price can surpass this level. A breakout and being able to test it from top to bottom will lead to creating a new signal to open long positions in order to update 1.4241, where I recommend taking profits. The succeeding target will be the high at 1.4324. If buyers are not active around 1.4119, then I recommend postponing long positions until the 1.4055 low has been tested, from which you can buy the pound immediately on a rebound, counting on an upward correction of 25-30 points within the day. The next level to buy is seen in the area of 1.3983, testing it will mean a reversal of the upward trend.

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

The initial task of the bears is to regain control of support at 1.4119, which they missed yesterday afternoon. However, it is clear that this will not be so easy, given the strong bullish momentum that we are currently seeing. Getting the pair to settle below this level and testing it on the reverse side (similar to selling, which I analyzed above) can create a signal to open short positions in order to pull down the pair to the 1.4055 area, where I recommend taking profits. The succeeding target will be the 1.3983 level. In case GBP/USD grows in the first half of the day, it is best not to rush to sell, but wait for a false breakout in the 1.4186 area (similar to the first sell signal, which I analyzed a little higher on the 5-minute chart). I recommend opening short positions immediately on a rebound but only from a high of 1.4241, counting on a downward correction of 30-35 points within the day.

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GBP/USD: plan for the European session on February 25. COT reports. Bears hit the pound, but failed to keep the market under their control

The Commitment of Traders (COT) report for February 16 revealed a reduction in both long and short commercial positions. Despite this, the bulls break through to new highs each time, taking advantage of the good news on vaccinations in the UK and good fundamentals, indicating economic growth even during the lockdown. The news that the UK will resort to easing quarantine measures in March will further fuel investors' interest in the pound. Long non-commercial positions fell from 60,513 to 60,269. At the same time, short non-commercial positions fell from 39,395 to 38,102, which kept the market bullish. As a result, the non-commercial net position rose to 22,167 from 21,118 a week earlier. The weekly closing price was 1.3914 against 1.3745. Any downward corrections with an immediate buy-back of the pound once again proves the presence of large players in the market. Constant updates of local highs and consolidation on them will contribute to the bullish trend that we have been observing since the beginning of February this year.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates some uncertainty regarding the pair's succeeding direction.

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 breakout of the upper border of the channel at 1.4165 will lead to a new wave of growth for the pound. In the event of a decline, support will be provided by the lower border of the indicator in the 1.4085 area.

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.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade
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