Relevance up to 06:00 2022-03-09 UTC–5
Long positions on GBP/USD:
In my forecast this morning, I drew your attention to the level of 1.3128 and recommended entering the market from this level. Let’s have a look at the 5-minute chart and analyze what happened. Bears have failed to break through the weekly low from above. It brought the pound back to resistance at 1.3128, which I suggested you look for when you were entering the market. A false breakout at this level and bulls’ failure to break through above this level – all this formed the sell signal. The pair didn’t fall much, dropping by 25 pips. In the second half of the day, the technical picture changed and the level of 1.3128 was completely reconsidered.
In the first half of the day, the pound was supported by Ukrainian President Zelensky’s interview with ABC TV channel amid the lack of important fundamental statistics. He said that he was ready to talk to Russia about Crimea and Donbas: “We can discuss it and find a compromise on how people will live there next. As for NATO, I cooled down on this issue after we realized that NATO is not ready to accept Ukraine. The Alliance is afraid of contradictory things and confrontation with Russia.” The market has positively perceived these statements since they may lower the degree of military actions in Ukraine. A lot of data on the US economy will be released during the US session, however, it is unlikely that these statistics will seriously influence the GBP/USD pair. In the second half of the day, bulls need to hold the price above the new support and the new yearly low at 1.3090. If the pair drops to this level after the release of strong statistics on the IBD/TIPP Economic Optimism indicator and the Trade Balance, it would be better to wait for a false breakout and buy the pound/dollar in the expectation of a recovery towards the resistance at 1.3151. That is where the moving averages are located. They play on the side of bears, so it will not be as easy as it seems to push the price higher. Moreover, buying the pair will be against the trend. A breakout and a retest of 1.3151 are likely to trigger some bulls’ stop orders, which will only strengthen the buyers’ confidence and open the way to the highs at 1.3195 and 1.3245. A more distant target is located at 1.3275. The pair is highly likely to reach this level, as soon everyone will be talking about the Bank of England and the regulator’s interest rate hike. Traders may lock in profits at this level. In case of the pound’s decline and a lack of bulls’ activity at 1.3090. Its breakthrough will increase the pressure on the pair. In such a case, I advise you to postpone buying until the price reaches the next support at 1.3034. Traders can open long positions there only after a false breakout is formed. I also recommend buying the pound on a bounce from 1.2976 or even lower at 1.2914, allowing an upward intraday correction of 20-25 pips.
Short positions on GBP/USD:
Bears are in no hurry to return to the market after they failed to continue pushing the pound down at the beginning of the European session. The pound is oversold significantly on the background of what may happen to the economy soon after the Bank of England will raise interest rates again. As for short positions, it would be better to be very careful. Only after the false breakout at the resistance of 1.3151, where the moving averages pass, it is possible to sell the pound according to the trend. The main target will be weekly and yearly low at 1.3090. Lack of buyers activity there during the next retest, as well as a breakthrough and a reverse test of this level bottom/top, may form an additional entry point into short positions with the targets at 1.3034 and 1.2976. A further target is located in the area of 1.2914, where traders may generate profit. If the pair rises during the US session after the weak US data is released, it is better to postpone selling the pound. A breakthrough of 1.3151 may result in a sharp rise in the pound amid stop-losses of sellers. In this case, I recommend opening short GBP/USD positions after a false breakout near 1.3195. It is possible to sell the pound immediately on a rebound from 1.3245, allowing an intraday correction by 20-25 pips.
EUR/USD: the plan for the American session on March 8 (analysis of morning deals). The euro bounced up against the background of statements by the President of Ukraine Volodymyr ZelenskyEUR/USD: the plan for the American session on March 8 (analysis of morning deals). The euro bounced up against the background of statements by the President of Ukraine Volodymyr Zelensky
The COT (Commitment of Traders) report for February 22 showed a sharp increase of short positions and a reduction of long ones. This led to the return of the negative delta value – the market continues to maintain balance even in the face of hostilities. With the fierce geopolitical conflict affecting virtually the entire world, it is not surprising that short positions in risky assets are only beginning to increase. This report has not yet considered the sell-off seen at the end of last week, so it is too early to talk about actual numbers. It also makes no sense to talk about what the policy of the Bank of England or the Federal Reserve will be because if the military conflict escalates, it won’t matter at all. Now, Russia and Ukraine have started negotiating, and much will depend on the results of these meetings and there will be many of them. In the current environment, it would not be too right to consider the COT report, especially given its secondary informative status for traders. It would be better to stay cautious about risky assets and buy the pound only as the tense relations between Russia, Ukraine, the EU, and the US subside. Any new sanctions against Russia will have serious economic consequences, which will affect financial markets. The February 22 COT report indicated that long non-commercial positions declined to 42,249 from 50,151, while short non-commercials rose to 48,058 from 47,914. This led to a negative nonprofit net position to -5,809 from 2,247. The weekly closing price rose to 1.3592 against 1.3532.
Signals of indicators:
Trading is conducted below 30 and 50 daily moving averages, which indicates a bear market persists.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
A breakout of the indicator’s lower boundary at 1.3090 will increase pressure on the pair. A breakout of the upper boundary of the indicator at 1.3151 will lead to the growth of 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 9Bollinger Bands (Bollinger Bands). Period 20Non-profit 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 the 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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