In my morning forecast, I focused on the 1.2441 level and planned to make trading decisions based on it. Let's examine the 5-minute chart and analyze what happened. A breakout of 1.2441 occurred without a retest, so I stayed out of trades in the first half of the day. The technical outlook for the second half of the session has been revised.

Long Position Strategy for GBP/USD

During the European session, the pound extended its recovery, reclaiming most of the losses incurred after the Bank of England's rate cut decision. However, upcoming high-impact U.S. economic data could significantly influence the pair's movement.

Key reports include Nonfarm Payrolls (NFP), U.S. Unemployment Rate, University of Michigan Consumer Sentiment Index, and Inflation expectations.

If the U.S. data surpasses expectations, renewed downward pressure on GBP/USD is likely, strengthening the U.S. dollar. Given the bullish market sentiment, I will look for buying opportunities only after a pullback and a false breakout near 1.2436, which acts as an intermediate support level.

A long entry from 1.2436, targeting a rise toward 1.2473. A break and retest of 1.2473 will confirm additional buying pressure, opening the way to 1.2505 and potentially 1.2545, where I plan to take profit. If GBP/USD falls further and fails to hold 1.2436, bearish pressure will intensify. In this case, I will wait for a false breakout at 1.2398 before considering longs. A rebound buy from 1.2361 will be an option for a 30–35 point intraday correction.

Short Position Strategy for GBP/USD

The bearish presence in the market remains, but sellers will need strong U.S. data to counter the current demand for the pound.

If GBP/USD continues to rise, I will look for short opportunities at 1.2473, where moving averages favor the sellers. A false breakout at 1.2473 will confirm a short entry, targeting a decline toward 1.2436. A break and retest of 1.2436 from below will trigger a further drop to 1.2398. The final downside target will be 1.2361, where I plan to take profit.

If GBP/USD rises above 1.2473, bulls will regain control. In this case, I will delay short positions until a test of 1.2505, selling only after a false breakout. If no downward move occurs at 1.2505, I will look for shorts near 1.2545, expecting a 30–35 point pullback.

Commitments of Traders (COT) Report

The January 28 COT report showed a decline in both long and short positions, signaling a shift toward bearish sentiment. Long positions fell by 16,365 to 59,331. Short positions decreased by 2,950 to 81,003. The gap between shorts and longs widened by 1,867, reinforcing a bearish outlook for GBP/USD.

Indicator signals

Moving averages

Trading is below the 30 and 50-day moving averages, which indicates a further decline in the pair.

Note: The period and prices of the 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

In case of a decline, the lower limit of the indicator around 1.2415 will act as support.

Description of indicators

• Moving average (a moving average that determines the current trend by smoothing out volatility and noise). The period is 50. It is marked in yellow on the graph.;

• Moving average (a moving average that determines the current trend by smoothing out volatility and noise). The period is 30. It is marked in green on the graph.;

• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) Fast EMA – period 12. Slow EMA – period 26. SMA – period 9;

• Bollinger Bands. Period – 20;

• Non–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;

• Non-commercial short positions represent the total short open position of non-commercial traders;

• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.