In my morning forecast, I paid attention to the 1.2340 level and planned to make decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. The 1.2340 breakout occurred without a reverse test, so I was unable to get a suitable entry point into short positions there during the pair's decline. In the afternoon, the technical picture was revised.

To open long positions on GBP/USD, it is required:

The pound continues to experience problems, as talks about interest rates, which took a slightly different turn at the end of last week, do not give traders peace of mind. The theory that the Bank of England can further harm the economy through high borrowing costs is not unfounded, especially given the latest data on retail sales in the UK. So it is not surprising why the pound returned to the fall, continuing the April bear market. Given that we do not have any statistics on the US ahead, most likely, the pressure on the pair will remain, so be very careful with long positions against the trend. Much will depend on the behavior of traders at the level of 1.2304, where only the formation of a false breakdown will give an entry point to buy in order to grow to the resistance of 1.2346, formed at the end of the first half of the day. A breakout and a top-down test of this range will return the chance of a GBP/USD recovery, which will lead to new purchases and allow you to get to 1.2388. There are moving averages that play on the sellers' side. In the case of an exit above this range, we can talk about a breakthrough to 1.2435, where I'm going to fix profits. In the scenario of a fall in GBP/USD and the absence of buyers at 1.2304 in the afternoon, sellers will have the opportunity to continue a major drop in the pair further along the trend. In this case, I will look for purchases in the area of 1.2265. The formation of a false breakdown there will be a suitable option for entering the market. It is possible to open long positions on GBP/USD immediately on a rebound from 1.2190 in order to correct 30-35 points within a day.

To open short positions on GBP/USD, you need:

The bears have every chance to continue the pair's decline. To do this, you need to protect the new resistance of 1.2346, where the formation of a false breakdown will make sure that large sellers are present in the market, which will lead to a further fall in GBP/USD and an excellent entry point into short positions. The target will be the nearest resistance of 1.2304, which is very little left before the test. A breakout and a reverse test from the bottom up of this range will increase the pressure on the pair, giving the bears an advantage and another entry point to sell with the aim of updating 1.2265. A longer-range target will be a minimum of 1.2190, where I will record profits. With the option of GBP/USD growth and the absence of bears at 1.2346 in the afternoon, which is unlikely, the bulls will have the opportunity to build a small correction at the beginning of the week with an upward movement to the resistance area of 1.2388, where the moving averages are located. I will also sell there only on a false breakout. In the absence of activity there, I recommend opening short positions on GBP/USD from 1.2435 in anticipation of the pair's downward rebound by 30-35 points within the day.

The COT report (Commitment of Traders) for April 9 showed a sharp reduction in both long and short positions. Pound buyers exited the market faster than sellers, and there are objective reasons for this: the first and main reason is the high inflationary pressure in the US, which will maintain demand for the dollar, exerting serious pressure on risky assets, including the British pound. The second reason is the soft policy of the Bank of England, which has yet to go anywhere. New statements from the regulator's representatives may negatively affect the bullish prospects for the pound, especially after the clear position of the ECB last week, which consisted of reducing rates in the eurozone as early as this summer. In addition to all this, the Federal Reserve needs to maintain a tough stance, and it is hardly worth counting on a strong bullish market in the GBP/USD pair. The latest COT report states that non-commercial long positions decreased by 18,352 to 80,000, while non-commercial short positions decreased by 3,190 to 51,748. As a result, the spread between long and short positions increased by 1,704.

Indicator Signals:

Moving Averages

Trading is conducted below the 30 and 50-day moving averages, indicating a bearish market.

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

Bollinger Bands

In case of a decline, the lower boundary of the indicator, around 1.2340, will act as support.

Description of Indicators:

• Moving average (determines the current trend by smoothing volatility and noise). Period - 50. Marked in yellow on the chart;
• Moving average (determines 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 - 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 positions of non-commercial traders;
• Short non-commercial positions represent the total short open positions of non-commercial traders;
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.