Yesterday, several entry points were established in the market. Let's look at the 5-minute chart and analyze what happened. In my morning forecast, I highlighted the 1.3133 level and planned to decide whether to enter the market from there. The breakout and retest of 1.3133 led to a buy entry for the pound, resulting in a gain of more than 30 pips. In the afternoon, a false breakout around 1.3181 enabled the establishment of short positions, resulting in a 25-pip decline. Similar short positions from 1.3216 yielded a profit of about 30 pips relative to the market.

To Open Long Positions for GBP/USD:

News that the UK Chancellor of the Exchequer, Rachel Reeves, is considering abandoning plans to raise the basic income tax rates provided support for the pound but raised questions about how she would compensate for the budget deficit, limiting the pair's upward potential. Today, there is no statistical data from the UK, so all attention will be focused on the aforementioned issue, as in just over 10 days, Reeves is expected to present the new budget for the country for the next year. If pressure returns to the pound, only the formation of a false breakout around the support level of 1.3130 will provide an opportunity to open long positions aimed at raising the pair to the resistance level of 1.3172. A breakout and retest from the top to the bottom of this range will increase the chances of strengthening GBP/USD, triggering sellers' stop orders and providing a suitable entry point for long positions, with the possibility of reaching 1.3211. The furthest target will be around 1.3244, where I plan to take profits. In the event of a decline in GBP/USD and a lack of buying activity at 1.3130, pressure on the pair will increase, leading to a move towards the next support at 1.3086. Only the formation of a false breakout there will be an appropriate condition for opening long positions. I plan to buy GBP/USD immediately on a rebound from the low of 1.3052, aiming for a correction of 30-35 pips within the day.

To Open Short Positions for GBP/USD:

Sellers were active yesterday following weak UK GDP data, as well as during today's Asian trading, which significantly impacted the pair's further bullish prospects. If GBP/USD rises again, I expect the first signs of bears around the resistance level of 1.3172. The formation of a false breakout there will be sufficient to sell the pound, targeting a decline towards the support level of 1.3130. A breakout and retest from below this range will deliver a more considerable blow to buyers' positions, leading to the triggering of stop orders and opening the way to 1.3086. The farthest target will be around 1.3052, where I will take profits. In the event of an increase in GBP/USD and a lack of activity at 1.3172, buyers will have a chance for a more significant rise in the pair, potentially continuing to create a bullish market. In this case, it is better to postpone shorts until the resistance at 1.3211 is tested. I plan to open short positions there only on a false breakout. If there is no downward movement there, I will sell GBP/USD immediately on a rebound from 1.3244, aiming only for a 30-35-pip downward correction within the day.

Recommendation for Reference:

Due to the shutdown in the U.S., fresh data on the Commitment of Traders is not being published. The last data is only relevant as of September 23.

In the COT report (Commitment of Traders) for September 23, there was a decrease in short positions and an increase in long positions. Pressure on the dollar remains – especially after recent data that are sure to compel the Federal Reserve to continue cutting interest rates. Meanwhile, the Bank of England's policy remains restrained, indicating its clear plan to continue fighting inflation, though it has not provided much confidence for pound buyers recently. The short-term dynamics of GBP/USD will be determined by new fundamental data. In the latest COT report, long non-commercial positions increased by 3,704 to 84,500, while short non-commercial positions fell by 912 to 86,464. As a result, the spread between long and short positions decreased by 627.

Indicator Signals:

Moving Averages

Trading is around the 30-day and 50-day moving averages, indicating market uncertainty.

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

Bollinger Bands

In case of a decline, the indicator's lower boundary around 1.3125 will act as support.

Description of Indicators

• Moving average (defines the current trend by smoothing volatility and noise). Period – 50. Marked in yellow on the chart;
• Moving average (defines 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 using the futures market for speculative purposes and meeting 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 short and long positions of non-commercial traders.