In my morning forecast, I highlighted the 1.2681 level and planned trading decisions around it. Let's review the 5-minute chart to see what happened. A decline and the formation of a false breakout at this level provided a strong entry point for buying, resulting in a rise of nearly 30 points. The technical outlook for the second half of the day remains unchanged.

Despite weaker-than-expected UK manufacturing data, the pound remained stable above the 1.2681 level. Since the report was already anticipated to show poor results, the pair avoided a sharper decline.

In the second half of the day, focus will shift to the US manufacturing PMI. A weak ISM manufacturing index could support further appreciation of the pound. Otherwise, pressure on the pair is likely to persist. Additionally, FOMC member Christopher Waller's speech is expected to attract attention, and it is advisable to monitor this event closely.

If GBP/USD declines further, I will look to open long positions after observing a false breakout near the 1.2681 support level, similar to the scenario described earlier. The initial target will be the 1.2713 resistance. A breakout above and subsequent retest of this range would offer a valid entry point for long positions, with potential gains targeting 1.2742. The final target will be the 1.2770 zone, where I plan to take profit.

If the pair declines without any significant support or bullish activity at 1.2681, bears could gain momentum, potentially triggering a larger sell-off at the beginning of the week. In this case, only a false breakout near 1.2644 would provide a basis for entering long positions. Alternatively, I would consider buying immediately on a rebound from the 1.2605 low, aiming for an intraday upward correction of 30-35 points.

To Open Short Positions on GBP/USD

Downward pressure on the pound could resume at any time, particularly if US data surpasses expectations. If the pair rises, I will consider opening short positions after observing a false breakout near the 1.2713 resistance. This scenario would offer a valid selling opportunity, targeting a move down to the 1.2681 support, where moving averages currently favor buyers.

A breakout below 1.2681, followed by a retest from below, could activate stop-loss orders, potentially accelerating the decline toward 1.2644. The final target will be the 1.2605 zone, where I intend to take profit.

If GBP/USD rises without significant bearish activity near 1.2713, buyers may gain momentum, extending the ongoing correction. In this case, bears may retreat to the 1.2742 resistance. I will sell at this level only after observing a failed breakout. If no downward movement occurs there, I will seek short positions on a rebound from 1.2770, targeting a short-term downward correction of 30-35 points.

The Commitments of Traders (COT) report for November 19 showed reductions in both long and short positions. While current figures already reflect the political climate under Donald Trump's presidency, the Bank of England's apparent decision not to pursue further interest rate cuts has not yet been fully factored into the market. This decision contradicts the government's goals of maintaining economic growth, which recent PMI data suggests will be increasingly difficult to achieve.

Traders have responded by reducing their purchases of the pound. However, it is worth noting that there hasn't been a notable increase in selling activity either. This could indicate a slowdown in the bearish trend that has dominated the pair. According to the latest COT report, non-commercial long positions decreased by 18,279 to 101,713, while non-commercial short positions fell by 2,544 to 61,398. As a result, the net gap between long and short positions increased by 2,182 positions.

Moving Averages

Trading is occurring above the 30- and 50-day moving averages, suggesting an upward correction for the pair.

Note: The moving averages analyzed by the author are based on the hourly (H1) chart and differ from the standard daily (D1) moving averages.

Bollinger Bands

In the event of a decline, the lower boundary of the Bollinger Bands near 1.2670 will serve as support.

Indicator Descriptions

• Moving Average (MA): Identifies the current trend by smoothing volatility and reducing noise. Periods: 50 (yellow) and 30 (green).
• MACD (Moving Average Convergence/Divergence): Measures momentum and trend direction. Fast EMA: period 12; Slow EMA: period 26; SMA: period 9.
• Bollinger Bands: Identifies volatility and potential price ranges. Period: 20.
• Non-commercial traders: Speculative market participants, including individual traders, hedge funds, and major institutions that use the futures market for speculative purposes.
• Non-commercial long positions: Total open long positions held by non-commercial traders.
• Non-commercial short positions: Total open short positions held by non-commercial traders.
• Net non-commercial position: The difference between non-commercial short and long positions.