To open long positions on GBP/USD, you need to:
In my morning forecast, I paid attention to the level of 1.3983 and recommended actions based on it. Let's look at the 5-minute chart and talk about where and how you could earn money. In the first half of the day, indices on activity in the UK were released, which allowed the bulls to break above the resistance of 1.3983. The test of this level on the reverse side (it was after this that I advised opening long positions in the morning) led to the formation of an excellent entry point to buy the pound. At the time of writing, the pair has gone up more than 25 points.
While trading will be conducted above the level of 1.3983, we can expect the British pound to continue to grow in the area of the next resistance of 1.4036, where I recommend taking the profits. The bullish momentum will depend on the data on the US economy, so the focus should be on them. A more distant target will be the area of 1.4127. In the case of a return of GBP/USD to the support of 1.3983 and the absence of buyers' activity, it is best to abandon long positions and wait for a return to the large area of yesterday's 1.3927, from which you can buy the pound immediately for a rebound in the expectation of an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need to:
The bears did not cope with the initial task, and now all their attention will be focused on the resistance of 1.4036. But only with the formation of a false breakout, there will be a signal to open short positions on the pound. The main goal will be the return of GBP/USD to the support area of 1.3983, which they missed today in the first half of the day. It will be possible to count on a larger bearish impulse only after a breakout and consolidation below 1.3983 occur, and a test of this level from the bottom up forms a convenient entry point into short positions intending to reduce to the minimum of the day in the area of 1.3927, where I recommend taking the profits. In the scenario of a lack of activity of sellers in the resistance area of 1.4036, it is best to postpone sales for a rebound from the high of 1.4127 in the expectation of a downward correction of 25-30 points within the day.
Let me remind you that the COT reports (Commitment of Traders) for February 9 recorded a sharp increase in long non-commercial positions and a reduction in short ones. This led to a fairly large increase in the positive delta. The bulls are making their way to new highs taking advantage of the good news on vaccination in the UK. Last week's report on UK GDP led only to a larger build-up of long positions in the expectation of a strong economic recovery in early 2021. Long non-profit positions rose from the level of 53,658 to the level of 60,513. At the same time, the short non-profit declined from the level of 44,042 to the level of 39,395, which only strengthened the bullish sentiment. As a result, the non-profit net position rose to 21,118, up from 9,616 a week earlier. The weekly closing price was 1.3745 against 1.3675. 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 and quickly return to the area of the 40th figure. 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. In March, we expect news about the support of the population and the UK labor market, which also pushes the pound up now.
Signals of indicators:
Moving averages
Trading is above 30 and 50 daily averages, which indicates a continuation of the bull market in the short term.
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
In the case of a decline in the pound, the support will be provided by the average border of the indicator in the area of 1.3980.
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.
