To open long positions on GBP/USD, you need to:
In my morning forecast, I advised you to pay attention to the level of 1.3860 and make decisions on entering the market from it. Let's look at the 5-minute chart and analyze the entry points. The lack of important fundamental statistics made traders think about taking profits on short positions in GBP/USD. It is clear that after the test of the level of 1.3860 from the bottom up, the bears did not even try to protect it. Then there was a reverse test of this area from top to bottom, which led to the formation of an excellent entry point into long positions. The increase was more than 40 points.
While trading will be conducted above the support of 1.3860, we can expect a further recovery of the pound in the area of resistance of 1.3931, which is the first reference point for buyers. However, only a break and consolidation above the resistance of 1.3931 will form an additional entry point into long positions in the continuation of the bullish trend of GBP/USD. At the same time, the goal will be a test of the maximum of 1.3995, where I also recommend taking a profit. In the scenario of a repeated decline of the pound in the second half of the day to the support area of 1.3860, it is best to wait for the formation of a false breakout there and only then open long positions. In case of a lack of activity on the part of buyers in the area of 1.3860 and another sharp decline in US bonds, I recommend postponing long positions until the test of the minimum of 1.3796 in the expectation of a rebound of 30-35 points within the day.
To open short positions on GBP / USD, you need to:
The bears failed to defend the resistance of 1.3931, and now their initial task is to defend the new high of 1.3931, which the pair is now aiming for. You can open short positions from there immediately at the first test with the aim of a downward correction of 30-35 points within the day. The next major resistance is seen in the area of 1.3995, from which you can also sell the pound immediately on the rebound. An equally important task for sellers is to regain control of the 1.3860 support. However, only a breakout and a test of this level from the bottom up form the entry point to the sale. The goal will be to return to the lower border of the side channel 1.3796, from which the pair is trying to get out today. The more distant target is the support of 1.3732. However, it will be available only if there is a very serious increase in demand for the US dollar since there are not very many people who want to sell the British pound.
I recommend reading my video forecast for today.
Let me remind you that the COT reports (Commitment of Traders) for March 2 recorded a reduction in both short and long commercial positions. The closing of short positions turned out to be stronger, which led to an increase in the positive delta. And although the rise in US bond yields is providing serious support to the US dollar at the moment, in the medium term, buyers of the pound can only take advantage of the moment of correction of the pair to enter the market at more attractive prices. The expectation of curtailing quarantine measures in March this year will support the pound, as will new measures to help the UK population fight the coronavirus pandemic, which was recently announced by Finance Minister Rishi Sunak. Long non-profit positions fell from the level of 68,266 to the level of 65,138. At the same time, short non-profit positions fell from the level of 37,288 to the level of 29,056, which maintains good prospects for the continued growth of the pound. As a result, the non-profit net position rose to 36,082 from 30,978 a week earlier. The weekly closing price was 13928 against 1.4067. The observed downward correction in the pound will attract new buyers.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily averages, which indicates an upward correction that is forming in the market.
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 pair, the average border of the indicator in the area of 1.3850 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.
