To open long positions on GBPUSD, you need to:
The news that the EU rejected the UK's fishing proposal, which was made the day before, did not lead to a strong fall in the British pound, although it put some pressure on the pair. The risk of disruption of the trade agreement remains quite high, so I do not advise you to rush to buy the pound. In the first half of the day, a sell signal for the pound was formed, similar to yesterday. However, you should pay attention to the fact that there was no false breakout of the level of 1.3445, and if you missed this trade, then it's okay since there was no real confirmation to enter short positions on the system. On the 5-minute chart, the area from where it was possible to sell the pound further along the trend is visible.
The technical picture has not changed in any way and the benchmarks have remained the same. The task of buyers today in the second half of the day today is to once again maintain control over the level of 1.3367. The formation of a false breakout will be a signal to open long positions in the expectation of recovery of GBP/USD in the short term to the resistance of 1.3445. The main goal will be to break through and consolidate above this range, which was not possible during the European session. Only a test of this level from top to bottom forms an additional entry point into long positions intending to reach the maximum of 1.3525, where I recommend fixing the profits. The longer-term target remains the resistances of 1.3617 and 1.3690, however, they will only be available if there is good news on the Brexit agreement. In the scenario of a lack of bull activity in the support area of 1.3367, as it was yesterday in the afternoon when buyers failed to protect the level of 1.3367 after the second test, it is best not to rush to buy but to wait for the update of the minimum of 1.3290. However, I recommend opening long positions from this level only after the formation of a false breakout. A larger support area is seen in the area of 1.3193, where you can buy GBP/USD immediately on the rebound with the expectation of a correction of 35-40 points.
To open short positions on GBPUSD, you need to:
Bears coped with the task for the first half of the day and did not let the pound above the resistance of 1.3445, which is quite problematic for the British pound. As long as trading is below this range, there is a possibility that the pressure on GBP/USD will return in the near future, especially if the fundamental data on the US economy turn out to be better than economists' forecasts. I recommend paying attention to the data on the number of initial applications for unemployment benefits in the United States, as well as changes in the level of spending and income of Americans. In a downward movement, the sellers' goal will be to test the support of 1.3367, on which a lot depends. A breakthrough of this level with a test from the bottom up forms a good signal to open short positions in the continuation of the downward trend already to reduce to the lows of 1.3290 and 1.3193, from which strong demand was observed at the beginning of the week. Only bad news on the trade agreement will lead to a larger collapse of GBP/USD to the area of the minimum of 1.3114. If the bulls manage to defend the level of 1.3367 and break above 1.3445, I recommend opening short positions immediately on the rebound from the maximum in the area of 1.3525 with the aim of a downward correction of 30-35 points within the day.
Let me remind you that in the COT reports (Commitment of Traders) for December 15, there is a decrease in interest in the British pound, both buyers and sellers. Long non-profit positions fell from 39,344 to 35,128, while short non-profit positions fell from 33,634 to 31,060. As a result, the non-profit net position remained positive, but fell to the level of 4,068, against 5,710 a week earlier. All this suggests that traders are taking a wait-and-see position, although a small preponderance of buyers, even in the current situation, continues to be observed. Given that the UK has imposed strict quarantine measures due to a new strain of coronavirus that is out of control and for which there is no vaccine yet, it will not be the right decision to expect a further strengthening of the pound at the end of this year. Only good news on Brexit can bring new players back to the market, betting on the growth of GBPUSD.
Indicator signals:
Moving averages
Trading is above 30 and 50 daily averages, however, the probability of further growth of the pound raises several questions.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the upper limit of the indicator in the area of 1.3445 will lead to a new upward wave of the pound. In case of a decline, the lower limit of the indicator in the area of 1.3335 will provide support.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence / divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (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.
- Short non-commercial positions represent the total short open position of non-commercial traders.
- Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
