To open long positions on GBP/USD, you need:
Last Friday afternoon was much more interesting. Let's take a look at the 5 minute chart and figure out the entry points. In the course of the European session, to my regret, we did not get the resistance update at 1.3892, which did not make it possible for us to create a good entry point for short positions. However, after the release of reports on the activity of the US economy, the 1.3892 level was still tested and after forming a false breakout on it, the pound quickly rolled back down to the support area of 1.3834, where the bulls emerged. Updating this level created a good entry point into long positions, afterwards the GBP/USD pair returned to the day's high, where trading ended.
In today's Asian session, the bulls have surpassed the 1.3892 range and now the main task is to consolidate on it. Forming a false breakout at this level can create an excellent entry point into long positions, for the purpose of pushing the pound to rise to the resistance area of 1.3944, where I recommend taking profits. However, in order for the bullish market to continue, the bulls will need to surpass this range as well. Consolidating on it and being able to test this level from top to bottom creates a good entry point to long positions, which will return the pair to the area of the monthly high of 1.4000. If the pound declines in the first half of the day and traders are not active around 1.3892, then it is best not to rush to buy: the best option would be to open long positions immediately on a rebound from a new local low like 1.3838, which was formed last Friday, or even lower - around 1.3792 based on an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears need to think of a way to regain support at 1.3892, such a scenario can return the pair to the horizontal channel, in which it spent the entirety of last Friday. Pulling down the quote and testing the 1.3892 level from the bottom up creates a good signal for opening short positions in GBP/USD with the main goal of reaching the support area of 1.3838, from where the pound began to actively grow last Friday. Surpassing this range will enable the bears to regain control of the market, which will push GBP/USD to a low like 1.3792, where I recommend taking profits. Considering that important fundamental data on the UK economy will not be published in the first half of the day, then it is possible that the pound can continue rising to the resistance area of 1.3944. Forming a false breakout there can create a good entry point for short positions in hopes that the pair can reach the support area of 1.3892. If the bears are not active there then the optimal scenario would be to sell immediately on a rebound from the monthly local high in the 1.4000 area, counting on a downward correction of 25-30 points within the day.
The Commitment of Traders (COT) for April 13 revealed an increase in both long and short positions, while the total non-commercial net position grew, which indicates that the bulls are more active. Good fundamental data, which have recently been released on the UK economy, once again prove that there is a fairly high probability of strong economic growth rates in the second quarter of this year, which will further contribute to the pound's growth in the medium term. The Bank of England has long been talking about how to proceed with stimulating monetary policy, as additional inflation concerns will emerge as the economy grows. The pound's growth at the beginning of this week once again proves its appeal for big players and, most likely, the bull market will only gain momentum by this summer.
The COT report indicated that long non-commercial positions rose from 45,270 to 52,851. At the same time, short non-commercials increased from 25,219 to 27,261, bringing the non-commercial net position to 25,590 from 19,951 weeks earlier. On the contrary, the weekly closing price dropped to 1.3753 from 1.3913.
Indicator signals:
Moving averages
Trading is carried out just above the 30 and 50 moving averages, which indicates an attempt by the bulls to resume the pound's growth.
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
In the event of a decline, support will be provided by the lower level of the indicator at 1.3838, from where you can buy the pound immediately on a rebound.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial 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 short and long positions of non-commercial traders.
