In my morning forecast, I pointed out the 1.3517 level and planned to base trading decisions on it. Let's look at the 5-minute chart and analyze what happened. A decline and a false breakout around 1.3517 led to a buying entry for the pound, resulting in a 20-point rise in the pair. The technical outlook for the second half of the day remained unchanged.

Requirements for Opening Long Positions on GBP/USD:

The pound fell below 1.3517 but did not see any significant movement. Most likely, the new focus will be on U.S. data. However, only reports on the JOLTS job openings and U.S. factory orders exceeding expectations will be able to spark volatility. Otherwise, pressure on the pair is likely to persist. Additionally, there will be a speech by FOMC member Lorie K. Logan. If the pound declines, I would prefer to act around the 1.3481 support level. A false breakout there will provide a good entry point for long positions, aiming for a return to the 1.3517 resistance level, where trading is currently taking place. A breakout and retest of this range from top to bottom will offer a new entry point for long positions with the prospect of a move toward 1.3555, which would revive the bullish market. The ultimate target will be the 1.3598 area, where I plan to take profit.

If GBP/USD declines and there is no bullish activity around 1.3481 in the second half of the day, pressure on the pound could intensify. In that case, only a false breakout around 1.3450 would create a suitable condition for opening long positions. I plan to open long positions immediately on a bounce from the 1.3416 support level, targeting an intraday correction of 30–35 points.

Requirements for Opening Short Positions on GBP/USD:

Sellers will attempt to act, but so far, there is no significant support from major players. Nevertheless, this does not prevent the pound from continuing its correction, which could intensify if U.S. data comes out strong. If GBP/USD jumps upward, I plan to act only after a false breakout forms around the 1.3517 resistance area, which served as support in the morning. This would be sufficient for an entry point for selling, aiming for a decline to the 1.3481 support level. A breakout and retest from the bottom up will lead to stop-loss triggers, opening the way to 1.3450. The ultimate target will be the 1.3416 area, where I plan to take profit.

If demand for the pound returns in the second half of the day and bears do not show themselves around 1.3517, where the moving averages are also located, it's better to delay selling until testing the 1.3555 resistance. I will only open short positions there after a false breakout. If there is no downward movement there either, I will look for short positions on a bounce around 1.3589, targeting a 30–35 point downward correction.

COT Report (Commitment of Traders) as of May 27:

The latest COT report showed a sharp increase in long positions and a less active rise in short positions. After the UK and the U.S. concluded a trade agreement, demand for the pound remains stable. Considering that the Bank of England is staying on the sidelines and not interfering with monetary policy, there are decent chances for further strengthening of the pound. Adding the renewed trade tensions between China and the U.S. and the weakness of the U.S. dollar, it becomes clear that the medium-term bullish trend for the pound is not over yet. There is no significant UK data expected in the near term, so major players are likely to have fewer reasons to sell the pound than to buy it.

The latest COT report indicates that long non-commercial positions increased by 14,247 to 102,391, while short non-commercial positions rose by 2,861 to 67,012. As a result, the gap between long and short positions narrowed by 11,469.

Indicator Signals:

Moving Averages

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

Note: The periods and prices of the moving averages are based on the H1 chart as analyzed by the author and differ from the classical definitions of daily moving averages on the D1 chart.

Bollinger Bands In case of a decline, the lower boundary of the indicator around 1.3505 will serve as support.

Indicator Descriptions:

• Moving Average: Defines the current trend by smoothing out volatility and noise. 50-period, marked in yellow on the chart.
• Moving Average: 30-period, marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence): Fast EMA – 12-period, Slow EMA – 26-period, SMA – 9-period.
• Bollinger Bands: 20-period.
• Non-commercial traders: Speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes.
• Long non-commercial positions: The total long open positions of non-commercial traders.
• Short non-commercial positions: The total short open positions of non-commercial traders.
• Net non-commercial position: The difference between the short and long positions of non-commercial traders.