To open long positions on GBP/USD, you need to:
As I noted in the morning forecast - the level of 1.3752 is of great interest for both buyers and sellers of the pound. Let's look at the 5-minute chart and analyze the morning entry point to long positions. I advised opening long positions under the condition of forming a false breakout, which happened. The chart clearly shows how the bulls defend the support of 1.3752, after which they consolidate above this range, forming an excellent entry point into long positions. At the time of writing, trading was conducted above the level of 1.3752, and the maximum movement of the pair up was about 25 points.
Given that we did not go beyond the side channel, the guidelines and strategy for the second half of the day remained the same, except for one thing: the market is now on the side of buyers, as they managed to protect the support of 1.3752 and we may see a continuation of the upward correction of the pound in the second half of the day. While trading will be conducted above 1.3752, we can expect growth in the resistance area of 1.3797, to get out of which today has not yet been possible. A break and consolidation above this level with a test of it from top to bottom will only strengthen the pound's position – this will lead to yesterday's high of 1.3846, where I recommend taking the profits. The next larger resistance area is seen around 1.3914. In the case of a decline in GBP/USD in the second half of the day, only the next formation of a false breakout in the area of 1.3752 forms a signal to enter long positions in the continuation of the growth of GBP/USD. In the scenario of the absence of bull activity in the support area of 1.3752, it is best not to rush to buy: the best option is to open long positions immediately on the rebound from the low of 1.3708 in the expectation of an upward correction of 25-30 points within the day. The next major support is seen in the area of 1.3670.
To open short positions on GBP/USD, you need to:
The initial task of the sellers of the pound remains to return the support of 1.3752 to control, which was not possible during the European session. Given that we are waiting for good data on the US consumer confidence index, the bears have a real chance of breaking through this range. However, only a break and consolidation below 1.3752 with a test of it from the bottom up will form a good signal to open short positions in the expectation of a return to the minimum of 1.3708, where I recommend fixing the profits. The next target will be last week's low of 1.3670. In the case of an upward correction of GBP/USD in the second half of the day, it is best not to rush to sell: you need to wait for the formation of a false breakout near the maximum of 1.3797 and only then open short positions to resume the bear market. In the scenario of a lack of activity on the part of bears in this range, the best option is to take short positions immediately on a rebound from the maximum of 1.3846, based on a downward correction of 25-30 points within the day. The next major resistance is seen in the area of 1.3914.
Let me remind you that the COT reports (Commitment of Traders) for March 23 recorded a reduction in long positions and a sharp increase in short ones. The fall in the pound is observed due to the strong US dollar, as the US shows quite good growth indicators after an active vaccination program conducted this winter and the implementation of a $ 1.9 trillion support plan. But it is worth paying attention to the fact that recently the data on the UK economy also come out quite good, which may be the first signal for buyers of the pound, who expect an active medium-term growth of the pair in the spring of this year. Given that the data in the COT reports are lagging, the picture could change dramatically by the end of this week. There is gradually growing confidence among investors and economists that the UK's economic recovery is just around the corner. This is also confirmed by the fact that the Bank of England is increasingly divided over how the economy will develop further and how to respond to all this. Those who expect to buy the pound should take a closer look at the market. So: long non-profit positions declined from the level of 55,190 to the level of 51,843. At the same time, the short non-profit rose from the level of 26,590 to 30,024, which indicates the control of sellers over the market. As a result, the non-profit net position fell to 21,819 from 28,600 a week earlier. The weekly closing price fell to 1.3859 against 1.3898.
Signals of indicators:
Moving averages
Trading is conducted in the area of 30 and 50 daily averages, which indicates the formation of a sideways nature of 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
A break of the upper limit of the indicator in the area of 1.3785 will lead to a new wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.3745 will increase the pressure on 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.
