To open long positions on GBP/USD, you need:
In the first half of the day, I paid attention to the level of 1.3926 and recommended making decisions based on it. Let's look at the 5-minute chart and talk about what happened. It is visible how the bulls are seeking a breakdown and a test of the 1.3926 level. However, there is no consolidation on it, after which the pair quickly returns down, forming a false breakdown and an entry point into short positions. But even if you did not have time to enter on the first signal, after a while, the bulls again make an unsuccessful attempt to exit above 1.3926, which again forms an entry point into short positions. At the time of writing, the downward movement was about 25 points.
Given that the bulls did not manage to get above the level of 1.3926, the technical picture remained unchanged and the strategy for the second half of the day. Buyers of the pound still need to regain the area of 1.3926, above which it is not yet possible to breakthrough. Fixing at this level and its reverse test from top to bottom will form a buy signal and open a direct road to the area of 1.3978, where I recommend fixing the profits. A more distant target will be the maximum of 1.4019, the test of which will completely cancel out the bear market. If the pressure on the pound increases in the second half of the day, which is unlikely, given the pressure with which the bulls are beating at the level of 1.3926, then most likely, we will see a decline in the pair to the area of 1.3872. Only the formation of a false breakdown forms a signal to open long positions to continue the pound's growth. If there is no activity of buyers in the area of 1.3872 and the further fall of GBP/USD, it is best to postpone long positions until the minimum of 1.3831 is updated. It is also possible to buy the pound immediately on a rebound from the level of 1.3787 with the aim of an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears coped with their task in the first half of the day and defended the resistance of 1.3926. The entry point for short positions was also formed. When trading is conducted below this range, you can count on a more significant drop in the pair. In the case of a repeated growth of GBP/USD in the second half of the day, only the formation of a false breakdown in the area of 1.3926 will become an additional signal to sell the pound, which will push the pair to the support of 1.3872. An equally important task for the bears will be a breakthrough and a reverse test of this level from the bottom up, which will lead to the formation of another entry point into short positions and will allow GBP/USD to get to the lows of 1.3831 and 1.3787, where I recommend fixing the profits. If the bulls manage to break above the resistance of 1.3926, I recommend postponing sales until the test of a new large area of 1.3978, where you can open short positions immediately for a rebound based on a downward correction of 20-25 points within the day.
Let me remind you that the COT reports (Commitment of Traders) for June 15 recorded a sharp reduction in both long and short positions. However, this did not negatively affect the positive delta. On the contrary, it even increased due to a more significant reduction in the positions of sellers. The data was collected even before the publication of the Federal Reserve's decision on monetary policy. Thus, I recommend not paying much attention to them since the picture is already different at the moment. Good inflation in the UK will continue to create some pressure on the Bank of England, but so far, the British regulator has no reason to panic, as it happens, for example, in the United States. This week, the central bank will hold a meeting, where most likely everything will remain unchanged, leading to continued pressure on the British pound and continuing its fall against the US dollar in the short term. Similar statements by the Bank of England representatives no longer work. Thus, the market will react only to new guidelines regarding monetary policy. An important moment for the pound will also be the full opening of the UK economy, which is scheduled for the 20th of this month. The spread of the Indian strain of coronavirus in the territory creates a number of obstacles to this, which affects the desire of investors to buy the British pound. The optimal scenario remains purchases for every good decline of the British pound against the US dollar. The COT report indicates that long non-commercial positions fell from the level of 59,238 to 55,203, and short non-commercial positions fell much more strongly from the level of 31,524 to the level of 23,033. As a result, the non-commercial net position increased from the level of 27,714 to the level of 32,170. The closing price of last week changed significantly and amounted to 1.4109 against 1.4175.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily averages, which indicates an attempt by the bulls to take the market under their control.
Note: The period and prices of 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 1.3926 will lead to a new wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.3872 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 specific 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.
