To open long positions on GBP/USD, you need to:
In my morning forecast, I advised you to pay attention to the level of 1.3855 and make decisions on entering the market from it. Let's look at the 5-minute chart and analyze the entry points. In the absence of important fundamental statistics, buyers managed to protect the support of 1.3855. However, was there a buy signal formed and a false breakout? On the hourly chart, it turned out to be just an excellent entry point into long positions, which can not be said about the 5-minute chart. You can see how the bears achieve a breakout of 1.3855, but then the bulls return this level to their control - like making a false breakout. But after 10 minutes, the price again goes below 1.3855, which negates all plans for a quick entry into long positions. We could only wait for the return to this level and its test on the reverse side (blue lines on the chart). Only in this scenario, I would have opened long positions in the expectation of a recovery in the pound, but this did not happen. As a result, I was forced to miss the pair's growth during the European session.
In the second half of the day, the focus will shift to the US inflation data, which will determine the further direction of the pair. Only a break and consolidation above the resistance of 1.3919, to which the pound is gradually creeping, will form a convenient entry point into long positions and will lead to the continuation of the upward correction of the pair. A test of this level from above will return new GBP/USD buyers to the market with the aim of growth to the resistance of 1.3995, where I recommend taking the profits. A further target will be a maximum of 1.4062, however, it will be available in the case of very weak fundamental data for the United States. In the scenario of a repeated decline in the pound in the second half of the day, it is worth noting that the nearest support level has now changed. It is best to wait for the formation of a false breakout at the level of 1.3848 and only then open long positions. There are also moving averages that play on the side of buyers. If there is no activity on the part of buyers in the area of 1.3848 and strong inflation in the US, I recommend postponing long positions until the test of the minimum of 1.3783, counting on a rebound of 30-35 points within the day. The next major support is around 1.3732.
To open short positions on GBP/USD, you need to:
The initial task of the bears remains the formation of a false breakout in the resistance area of 1.3919, to which the pair is gradually approaching. This scenario will return new sellers to the market, hoping for a further fall in the pound to the support area of 1.3848. This will happen only if there are good and strong data on inflation in the US, which will then allow us to achieve a breakdown and test the level of 1.3848 from the bottom up - this is an additional entry point into short positions to reach the minimum of 1.3783, where I recommend taking the profits. A larger drop in the pound below this level will lead to the demolition of several buyers' stop orders and open a direct road to the lows of 1.3732 and 1.3680. If there is no bear activity in the area of 1.3919, it is best not to rush to sell. I recommend opening short positions immediately for a rebound only from the maximum of 1.3995, based on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.4062.
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 just above 30 and 50 daily averages, which indicates that the bulls are trying to maintain an upward correction for 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 upper limit of the indicator in the area of 1.3919 will lead to a new wave of growth of the pound.
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.
