GBP/USD: plan for the European session on May 27, 2020


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

Yesterday, the bears made several attempts to regain market control after the pair fell to resistance 1.23036, which has now transformed to the 1.2359 level. This range should be highlighted in the morning, since its breakthrough and consolidation above will continue the bullish momentum that we observed yesterday after the news related to the Brexit trade negotiations. With reference to one of the European diplomats, it became known that the European Union is ready to abandon the tough approach to the problem of fisheries in negotiations with the UK. However, in the first half of the day, an equally important task for the bulls will be to protect support 1.2304, since forming a false breakout at this level will be a new signal to open long positions that can lead to a breakthrough of the high of 1.2350. In the absence of demand in the area of 1.2304, it is best to postpone new long positions to a test of a low of 1.2252, from where you can expect an upward correction of 30-40 points within the day. However, be careful with purchases at these highs, since talking about EU concessions are only talk. The Commitment of Traders (COT) reports for May 19 recorded a sharp increase in both short and long positions, which indicates a gradual return of interest of players in the British pound. However, the advantage remained on the side of sellers. The COT report states that short non-profit positions increased to 54,799 over the week, from 45,213, while long non-profit positions also increased from 31,525 to 35,820. As a result, the non-profit net position has become more negative and turned out to be at the level of -18, 989, against -13,668, which so far indicates a bearish trend in GBP/USD.

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

The sellers’ task for the first half of the day is to return 1.2304 support to themselves, since consolidating below this level will be a signal to open short positions, which will quickly block yesterday’s growth and return GBP/USD to the low of 1.2252 and 1.2206, where I recommend taking profit. Given that important fundamental statistics are not published today, traders will closely monitor the news related to possible changes in negotiations on a trade agreement between the EU and the UK. If the bulls make an attempt to raise the pair in the morning, then short positions in the pound can be calculated only if a false breakout is formed at 1.2425, but you can sell GBP/USD immediately for a rebound only at new local highs1.2425 and 1.2463 and then with the expectation of a slight correctional decline at the end of the day of 20-30 points.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 moving averages, which will act as support when the pair decreases.

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

Bollinger bands

A break of the upper border of the indicator at 1.2360 will lead to a larger growth of the pound. A break of the lower border of the indicator in the region of 1.2304 will increase the pressure on the pair.

Description of indicators

  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
  • Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
  • MACD indicator (Moving Average Convergence / Divergence – moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-profit traders are speculators, such as individual traders, hedge funds and large institutions that use the futures market for speculative purposes and meet certain requirements.
  • Long nonprofit positions represent the total long open position of nonprofit traders.
  • Short nonprofit positions represent the total short open position of nonprofit traders.
  • The total non-profit net position is the difference between short and long positions of non-profit traders.

The material has been provided by InstaForex Company –

Source:: GBP/USD: plan for the European session on May 27 (analysis of yesterday’s trade). Pound byers’ optimism depends on 1.2304.

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