In my morning forecast, I focused on the 1.2418 level as a key point for making trading decisions. Let's analyze the 5-minute chart to see what happened. A rise followed by a false breakout around 1.2418 provided an excellent selling opportunity, which by the time of writing had resulted in a decline of more than 30 points. Given this movement, the technical picture has been revised for the second half of the day.

Long Position Strategy for GBP/USD:

The pound failed to break above 1.2418, largely due to the absence of fundamental statistics and uncertainty surrounding new U.S. trade tariffs under Donald Trump. With no U.S. data scheduled for the second half of the day, the market may remain quiet.

I will consider buying GBP/USD only after a false breakout near the 1.2373 support, which was not tested in the first half of the day. A successful rebound from 1.2373 could push GBP/USD back to 1.2418. A break and consolidation above 1.2418, followed by a retest from above, will provide a fresh entry signal for long positions, aiming for 1.2462, which could restore bullish sentiment. The ultimate upside target remains 1.2505, where I plan to take profit.

If GBP/USD falls further and buyers show no interest at 1.2373, pressure on the pound will increase. In that case, I will look for a false breakout near the 1.2338 low as a buying opportunity. If the pair drops further, I plan to buy on a direct bounce from 1.2294, expecting an intraday correction of 30-35 points.

Short Position Strategy for GBP/USD:

Sellers remain active, as evidenced by their resistance at 1.2418, but a full-fledged downward move has yet to materialize, raising doubts about further bearish potential. The lack of U.S. economic data may weaken sellers' position.

A false breakout at 1.2418, similar to the morning trade setup, will confirm the presence of large sellers and signal a short entry, targeting 1.2373. A break and consolidation below 1.2373, followed by a retest from below, will trigger stop-losses and open the way to 1.2338. The final downside target remains 1.2294, where I will lock in profits.

If demand for the pound returns in the second half of the day and bears fail to defend 1.2418, bulls will regain control. In this case, I will wait for a test of the next resistance at 1.2462 before looking for selling opportunities. A false breakout at 1.2462 will provide an entry for short trades. If GBP/USD continues higher, I will look to sell near 1.2505, aiming for an intraday pullback of 30-35 points.

The January 28 COT report showed a decline in both long and short positions, indicating that market sentiment continues to shift in favor of sellers. UK economic data highlights rising inflation, but the economy continues to contract, limiting the Bank of England's ability to maneuver. The BoE is expected to cut rates at its next meeting, which dampens the pound's growth potential. The latest COT report indicated that long non-commercial positions decreased by 16,365, to 59,331, while short non-commercial positions fell by 2,950, to 81,003. As a result, the spread between long and short positions increased by 1,867.

Indicator Signals

Moving AveragesGBP/USD trades below the 30-day and 50-day moving averages, reinforcing a bearish bias.Note: The moving average periods referenced are on the hourly (H1) chart, differing from classical daily (D1) moving averages.

Bollinger Bands1.2373 serves as a lower-band support in case of a decline.

Technical Indicator Breakdown:

• Moving Averages (MA):
  • 50-period MA (Yellow) – Identifies the trend and smooths volatility.
  • 30-period MA (Green) – A shorter-term trend indicator.

• MACD (Moving Average Convergence/Divergence):
  • Fast EMA (12-period), Slow EMA (26-period), Signal SMA (9-period).

• Bollinger Bands (20-period):
  • Defines key support and resistance areas.

• Non-commercial traders include hedge funds and institutional investors.
• Long positions reflect overall bullish sentiment.
• Short positions indicate bearish sentiment.
• The net non-commercial position is the difference between long and short contracts.