To open long positions on GBP/USD, you need to:
The British pound broke through to new annual highs, achieving another breakdown of the resistance of 1.3825. Let's look at the 5-minute chart and talk about what happened and how we should have acted. You can see how the bulls break above 1.3825 and gain a foothold in this range. However, it is fair to note that the reverse test of the level of 1.3825 from top to bottom did not occur, so I was forced to miss the upward movement that was observed in the first half of the day.
At the moment, as long as the trade is conducted above the support of 1.3825, the demand for the pound will remain. However, only a test of 1.3825 from the top down or the formation of a false breakdown after the release of data on inflation in the US will form a signal to open long positions in the continuation of the strengthening of the British pound in the area of the maximum of 1.3879. More persistent buyers will count on the test of 1.3918, where I recommend fixing the profit. If the report on the consumer price index turns out to be better than economists' forecasts, and the pound returns to the level of 1.3825 in the second half of the day, it is best not to rush to buy but to wait for the formation of a false breakdown in the support area of 1.3791, which yesterday acted as a fairly powerful resistance, limiting the upward potential of the pair. There are also moving averages that play on the side of buyers of the pound. If there is no activity on the part of the bulls at the level of 1.3791, I recommend waiting for the test of the minimum of 1.3757 and buying GBP/USD for a rebound with the aim of an upward correction of 20-30 points within the day.
To open short positions on GBP/USD, you need to:
The task of the pound sellers in the second half of the day is to regain control over the support of 1.3825. Only the consolidation and the test of this level from the bottom up form a signal to open short positions in the expectation of a downward correction to the area of the minimum of 1.3791, where I recommend fixing the profit. More persistent sellers will wait for the test of the area of 1.3757, where buyers will try to build the lower border of the larger ascending channel formed on February 3 of this year. If the growth of GBP/USD continues in the second half of the day, and the data on US inflation does not surprise traders, it is better not to rush to sell the pound but to wait for the update of the new resistance of 1.3879, from which you can sell GBP/USD immediately on the rebound with the aim of a downward correction of 20-25 points within the day. The next major level for opening short positions is around 1.3918.
Let me remind you that the COT reports (Commitment of Traders) for February 2 recorded an increase in both long and short positions. This time, there were more buyers, which led to an increase in the positive delta. The desperate attempts of the bulls to break above the annual highs will sooner or later lead to success, so buyers do not lose hope for the continuation of the bullish trend in February this year. Each major decline in the pound forces major players to increase their long positions in the expectation of a more active recovery of the GBP/USD in the future. Long non-profit positions rose from the level of 47,360 to the level of 53,658. At the same time, the short non-profit rose from the level of 39,395 to the level of 44,042, which did not allow the bears to take control of the market. As a result, the non-profit net position rose to 9,616 from 7,965 a week earlier. The weekly closing price was 1.3675 against 1.3676. The fact that the bulls held their positions on such high volatility within the week once again suggests that the pair is set to overcome the annual highs. I recommend betting on further strengthening of the pound. As the quarantine measures are lifted, which are expected to be phased out in February this year, demand for the pound will only increase. The support of the population and the labor market, which will be announced in March this year, will also have a positive impact on the British pound. All talk of negative interest rates on the part of the Bank of England was again postponed indefinitely last week, which allowed the British pound to "spread its wings".
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily averages, which indicates the continued growth of the pound.
Note: The period and prices of the 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 lower limit of the indicator in the area of 1.3825 will increase the pressure on the pound, which will lead to a larger decline in the pair.
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.
