In my morning forecast, I highlighted the 1.3497 level and planned to base entry decisions on it. Let's look at the 5-minute chart and see what happened. A rise and the formation of a false breakout at that level led to an entry point for selling the pound, but the pair did not experience a major decline. After a 15-point drop, demand for the pound returned. The technical picture was revised for the second half of the day.

To Open Long Positions on GBP/USD:

The pound has slightly rebounded, but overall the situation still favors selling. Data from the Richmond Fed Manufacturing Index and a speech from FOMC member Neel Kashkari may put pressure on the pound again, although the main focus will likely be on the publication of the FOMC meeting minutes. From it, we'll learn how the Fed views interest rates and related policy.

If the pound declines, I prefer to act around the new support at 1.3473, formed in the first half of the day. A false breakout there will offer a good entry point for long positions, targeting a recovery toward resistance at 1.3517. A breakout and downward retest of this range would offer another opportunity to buy with the prospect of breaking above 1.3561, which would return the market to a bullish state. The final target will be the area around 1.3602, where I plan to take profit.

If GBP/USD declines and there is no buying activity near 1.3473 in the second half of the day, pressure on the pound may intensify. In that case, only a false breakout around 1.3431 would be a suitable condition for opening long positions. I plan to buy GBP/USD on a rebound from the 1.3399 support with a goal of an intraday correction of 30–35 points.

To Open Short Positions on GBP/USD:

Sellers have yet to make a notable move, likely waiting for strong U.S. data. If GBP/USD rallies, I'll act only after a false breakout around resistance at 1.3517, where moving averages favor the bears. This will be enough to justify an entry into short positions, targeting a drop to support at 1.3473. A breakout and upward retest of this range will trigger stop-loss orders and open the path to 1.3431. The final target will be the 1.3399 area, where I plan to lock in profits.

If demand for the pound remains in the second half of the day and bears fail to assert themselves around 1.3517, it's better to postpone selling until the 1.3561 resistance is tested. I will open short positions there only after a false breakout. If there's no downward movement, I'll look for shorts around 1.3602, but only for a downward correction of 30–35 points.

COT Report (Commitment of Traders) for May 20:

The report showed a decrease in long positions and an increase in short positions. Despite this, demand for the pound remains decent after the UK and U.S. reached a trade agreement, even though the Bank of England plans to cut interest rates. Similar plans from the Federal Reserve continue to weaken the dollar, allowing the pound to gain.

In the latest COT report, long non-commercial positions fell by 1,396 to 88,144, while short positions increased by 1,827 to 64,151. As a result, the gap between long and short positions narrowed by 381.

Indicator Signals:

Moving Averages Trading is below the 30- and 50-day moving averages, indicating a potential decline in the pound.Note: The moving averages are based on the H1 chart and differ from the classical D1 averages.

Bollinger Bands If the pair declines, the lower boundary of the indicator around 1.3473 will act as support.

Indicator Descriptions:

• Moving average – Identifies trend direction by smoothing out volatility and noise. Period 50 (yellow), Period 30 (green).
• MACD (Moving Average Convergence/Divergence) – Fast EMA 12, Slow EMA 26, Signal SMA 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.
• Long non-commercial positions – Total long open positions held by non-commercial traders.
• Short non-commercial positions – Total short open positions held by non-commercial traders.
• Net non-commercial position – The difference between long and short positions held by non-commercial traders.