To open long positions on GBP/USD, you need:
In the first half of the day, I paid attention to the level of 1.3833 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 pair is gradually sliding into the support area of 1.3833. but before updating this range and forming a false breakdown on it, literally 2-3 points were not enough. For this reason, I did not open long positions on the pound during the European session. No other signals were formed. The data on lending in the UK did not particularly surprise traders.
From a technical point of view, there were also no significant changes in the market, and the trading strategy for the second half of the day remained unchanged. And although the main task of buyers for today is to regain control over the resistance of 1.3885, it's time for them to take care of the support of 1.3833. Only the formation of a false breakdown will signal to open long positions in the opposite direction against the current downward trend. If the bulls do not show much activity at this level, I recommend counting on purchases immediately for a rebound only from a larger minimum in the area of 1.3787 with the aim of an upward correction of 25-30 points within the day. In the case of GBP/USD growth in the second half of the day, only a breakthrough and consolidation above the resistance of 1.3885, followed by its test from top to bottom, form a signal to open long positions in the hope of recovering to the maximum of 1.3937. Here, it will again be possible to observe the active actions of sellers of the pound. A breakthrough in this area will lead the pair to 1.3978 and 1.4019, where I recommend fixing the profits.
To open short positions on GBP/USD, you need:
So far, the bears are doing an excellent job with their tasks: controlling the resistance of 1.3885 and reducing the pair to the support area of 1.3833. However, only a break in the 1.3833 area and its test from the bottom up form a signal to open new short positions to update the monthly low in the area of 1.3787, from which the bulls were so actively buying the pound last week. Under the scenario of GBP/USD growth in the second half of the day after insufficient data on the US consumer confidence indicator, it is best not to rush into sales. Only the next formation of a false breakdown at the level of 1.3885 will lead to forming a signal to open short positions in continuation of the bearish trend formed at the end of last week. If the bears do not show any activity in the area of 1.3885, and we see growth above this range, it is best to postpone selling until the resistance update of 1.3937, where you can open short positions on the pound immediately for a rebound, counting on a downward correction of 20-25 points within the day. The next major resistance is seen in the area of 1.3978.
Let me remind you that the COT reports (Commitment of Traders) for June 22 recorded a sharp reduction in long positions and an increase in short ones. The report showed changes in the market after the US Federal Reserve's monetary policy meeting. A similar meeting of the Bank of England, which took place last week, only worsened the situation. Many traders counted on the regulator's more active position about interest rates and the bond purchase program. But as we already know, as long as there is no severe inflationary pressure in the UK, the Bank of England is unlikely to rush to make changes. The spread of the Indian strain of coronavirus in the UK creates additional difficulties with the full opening of the economy. Thus, traders also do not find reasons for the growth of the British pound. The economy may show more modest results in the 2nd quarter of 2021. Despite this, the optimal scenario is to buy the pound with each good decline in a pair with the US dollar. The COT report indicates that long non-commercial positions decreased from the level of 55,203 to the level of 51,445. However, on the contrary, short non-commercial positions increased sharply from the level of 23,033 to the level of 33,518. As a result, the non-commercial net position decreased from 32,170 to the level of 17,972. The closing price of last week changed significantly and amounted to 1.3924 against 1.4109.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily averages, which indicates that the pound continues to decline along with the trend.
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
In the case of growth, the movement will be limited near the upper limit of the indicator 1.3895.
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.
