To open long positions on GBP/USD, you need:
A normal entry point did not appear yesterday afternoon, short deals could be observed during the European session. News that one of the negotiators on the Brexit trade deal had contracted the coronavirus forced the rest of the market to suspend the meeting and postpone it indefinitely. However, this did not generate any market reaction, as there is still hope that the agreement will be signed at the last moment.
Traders will focus on the 1.3237 level. The pound will continue to rise as long as trading is conducted above this range. In case the pair falls to this level in the first half of the day, a false breakout there will be a signal to open long positions in hopes to return to the resistance area of 1.3310, which is where the pair fell a few days ago. Getting the pair to settle above 1.3310 will lead to a more powerful bullish momentum, in anticipation of renewing highs of 1.3378 and 1.3476, which is where I recommend taking profits. However, such a scenario will only be possible if we receive very good data on retail sales in the UK, which is set to be released this morning. In case there is not much activity in the support area of 1.3237, it is best not to rush to buy, but to wait until a larger low at 1.3168 has been updated, from where you can open long positions for a rebound during the first test of this range, counting on a correction of 20-25 points.
To open short positions on GBP/USD, you need:
So far the bears have taken a wait-and-see attitude and the main focus is currently on returning support at 1.3237. Sellers' behavior at this level will determine the pair's succeeding direction. If buyers are not active, then being able to settle and test 1.3237 from the bottom up (similar to yesterday's sale, which I analyzed in detail in my review of the US session) will be the first signal to open short positions in the pound, in hopes of falling to support 1.3168, which is now the middle of the horizontal channel. We can say that the bears have taken the market under their control only when they have settled below the 1.3168 level, which will quickly push the pound to the lower border of this channel at 1.3106, where I recommend taking profits. In case bears are not active, it is best to postpone short positions until the test of the monthly high of 1.3310, or sell the pound immediately upon a rebound from resistance 1.3378, counting on a correction of 20-30 points within the day.
The Commitment of Traders (COT) report for November 10 showed a slight increase in long positions and a sharp inflow of short positions. Long non-commercial positions rose from 27,701 to 27,872. At the same time, short non-commercial positions increased from 38,928 to 45,567. As a result, the negative non-commercial net position was -17,695, against -11,227 weeks earlier, which indicates that the sellers of the British pound retains control and also shows their minimal advantage in the current situation.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates the likelihood of the pound's succeeding growth.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
A breakout of the upper border of the indicator around 1.3290 will lead to a new wave of growth for the pound. In case the pair falls, support will be provided by the lower border at 1.3200.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial 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.
- Short non-commercial positions represent the total short open position of non-commercial traders.
- Total non-commercial net position is the difference between short and long positions of non-commercial traders.
