In my morning forecast, I highlighted the 1.2325 level as a point to make market entry decisions. Let's examine the 5-minute chart to understand what happened. A rise and the formation of a false breakout around 1.2325 created a sell signal for the pound, but as of the time of writing, a significant decline has not yet occurred. The technical outlook for the second half of the day has been revised.

To Open Long Positions on GBP/USD:

The pound saw slight gains in the first half of the day after strong UK industrial orders data from the Confederation of British Industry. However, it failed to break above 1.2325. This limited upward potential is likely tied to the anticipated speech by US President Donald Trump today, as any mention of new trade tariffs could quickly push the GBP/USD pair lower. Additionally, US weekly jobless claims data will be released today, which could help the pound recover if the figures disappoint economists' expectations.

If the pair declines, I plan to buy only after a false breakout forms near the nearest support at 1.2271, which was not reached in the first half of the day. The target will be a recovery of GBP/USD to the 1.2325 resistance, where trading is currently taking place. A breakout with a retest of this range from above will create a new entry point for long positions, aiming for 1.2370, strengthening the bullish trend. The final target will be 1.2412, where I plan to take profits.

If GBP/USD falls and no bullish activity is observed around 1.2271, the pound could erase its morning gains. In this case, only a false breakout near the 1.2231 low would justify opening long positions. Direct purchases on a rebound will be possible from 1.2197, targeting a 30-35 point intraday correction.

To Open Short Positions on GBP/USD:

Sellers managed to defend the 1.2325 level in the first half of the day. However, their lack of further activity raises concerns. For this reason, it remains crucial for bears to hold the 1.2325 resistance, which has already been tested once. Only a false breakout at this level after US data will confirm a sell entry point, targeting a decline to 1.2271. A breakout and retest of this range from below will trigger stop-loss orders, paving the way toward 1.2231, signaling the end of the bullish trend. The final target will be 1.2197, where I plan to take profits.

If demand for the pound persists in the second half of the day and bears fail to act around 1.2325, where moving averages also favor sellers, I will postpone shorts until the next resistance at 1.2370. I will open short positions there only after a false breakout. If no downward movement occurs there either, I will look for short positions on a rebound from 1.2412, targeting a 30-35 point correction within the day.

Commitment of Traders (COT) Report:

The COT report (Commitment of Traders) for January 14 showed a sharp increase in short positions and a reduction in long positions. A lot has changed in the balance of power. Obviously, the market is at a turning point right now, and the almost equal number of buyers and sellers is not in favor of the former. Data on the labor market will be released soon, and after the news on weak UK GDP growth and high inflation, the future decision of the Bank of England no longer seems so clear. Whether the regulator will lower interest rates in the face of the current problems is a rather complicated question. The latest COT report indicated that long non-profit positions decreased by 786 to 80,557, while short non-profit positions added 13,282 to 80,119. As a result, the gap between long and short positions increased by 413.

Indicators Overview:

Moving Averages:Trading is occurring near the 30- and 50-day moving averages, indicating a sideways market.

Bollinger Bands:If the pair declines, the lower boundary of the indicator near 1.2295 will act as support.

Indicator Descriptions:

• Moving average (a moving average that determines the current trend by smoothing out volatility and noise). The period is 50. It is marked in yellow on the graph.;

• Moving average (a moving average that determines the current trend by smoothing out volatility and noise). The period is 30. It is marked in green on the graph.;

• MACD indicator (Moving Average Convergence/Divergence – convergence/divergence of moving averages) Fast EMA – period 12. Slow EMA – period 26. SMA – period 9;

• Bollinger Bands. Period – 20;

• Non–profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain requirements;

• Long non-commercial positions represent the total long open position of non-commercial traders;

• Non-commercial short positions represent the total short open position of non-commercial traders;

• The total non-commercial net position is the difference between the short and long positions of non-commercial traders.