Black Pipper

Forex Dreamers

Plan for the European session on April 27. Commitment of Traders COT reports (analysis of yesterday’s deals). The pound is at risk of collapse

To open long positions on GBP / USD you need:

Several signals to enter the market were formed yesterday. Let’s look at the 5-minute chart and analyze all the entry points: in my morning forecast, I paid attention to the level of 1.3892 and recommended to make a decision based on it. After a small downward correction of the pair in the first half of the day in this range, the bulls achieved a false breakout there, where I recommended opening long positions in the morning. As a result, the upward movement was about 35 points, which is quite good for intraday trading. Closer to lunchtime, the bears returned the pair back to the level of 1.3892 and achieved its breakdown. In this scenario, all that was needed was to wait for a reverse test of the level 1.3892 from the bottom up, which happened in the middle of the American session. However, to my regret, a major downward movement of the pound never took place.

I have analyzed all transactions in more detail in my video forecast.

Before examining the technical picture of the pound, let’s take a look at what happened in the futures market. There are quite serious changes there, although this did not affect the balance of power in any way. The COT reports (Commitment of Traders) for April 20 recorded an increase in both long and short positions, while the total non-commercial net position remained almost unchanged, only slightly decreasing from the previous value. The growth of positions indicates a return to the market of players hoping for further growth of the pound. However, such high prices are very attractive for sellers, therefore, a sharp rise in short positions was also noted. Good fundamental data, which came out last week on the UK economy, once again proves a fairly high probability of strong economic growth rates in the 2nd quarter of this year. This will further contribute to the growth of the British pound in the medium term, so I recommend betting on its further strengthening against the US dollar. It is important how the market reacts to the fundamental reports on the American economy this week and to the decision of the Federal Reserve System on interest rates – this will be the main one for the further movement of the pound along the trend, or for a downward correction of the pair. The COT report indicated that long non-commercial positions rose from 52,851 to 61,053. At the same time, short non-commercial positions increased from 27,261 to 35,875, resulting in a non-commercial net position only slightly declining to 25,178, versus the level of 25,590 a week earlier. On the other hand, the closing price jumped to 1.3991 against 1.3753 last week, which indicates an upward potential for the pair.

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Today we are awaiting data on retail sales from the Confederation of British Industrialists. A good report could help the British pound to regain its positions and regain control over the 1.3892 level, which was not possible yesterday afternoon. However, it is necessary to act with extreme caution, since it is far from clear where the trend will continue, especially if the level of 1.3892 turned out to be too tough for buyers. Only a return and test of this range from top to bottom on the volume will allow to build up long positions, which generates a signal to buy the pound, counting on an increase to a maximum of 1.3944. A further target will be the area of ​​1.4000, where I recommend taking profits. If the pressure on the pound returns in the first half of the day, and the report does not greatly please traders, I recommend not to rush into purchases: the best scenario would be a test of the large support at 1.3838, which was formed last Friday. From this level, you can buy the pound immediately on a rebound in the expectation of a correction of 20-25 points within the day. The next big support is seen around 1.3792.

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To open short positions on GBP / USD you need:

The initial task of the bears in the first half of the day will be to protect the resistance at 1.3892. Only after the release of data on retail sales in the UK and the formation of a false breakdown there, one can think about selling the pound with the expectation of a further correction to the support area of ​​1.3838, on which quite a lot will depend today. A breakdown and consolidation below this range with a reverse test of it from the bottom up will form an additional entry point to sell already with an exit to the minimum of 1.3792, where I recommend taking profits. In the scenario of growth above resistance 1.3891 in the first half of the day and good data on retail sales, which are expected as the British economy recovers: I recommend postponing short positions until the test of a new local maximum around 1.3944, where you can sell the pound in case of a false breakout. Selling GBP / USD immediately on a rebound, I advise you to consider only after the renewal of the monthly resistance in the 1.4000 area.

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EUR / USD: plan for the European session on April 27. Commitment of Traders COT reports (analysis of yesterday’s deals). Buyers of the euro failed to regain the resistance at 1.2089. Bears Sight Level 1.2047

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Indicator signals:

Moving averages

Trading is carried out in the area of ​​30 and 50 moving averages, which indicates market uncertainty with a further 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 indicator in the area of ​​1.3915 will lead to a new wave of growth of the pound. A breakout of the lower boundary at 1.3870 will lead to a new wave of decline in the pair.

Description of indicators

  • Moving average (moving average, determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
  • Moving average (moving average, determines the current trend by smoothing 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 who 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.
  • Non-commercial short positions represent the total short open position of non-commercial traders.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.

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