To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3870 and recommended making decisions from it. Let's look at the 5-minute chart and talk about what happened. The return to the support of 1.3870 and its subsequent test led to a breakdown, as it is clear that there were no more buyers at this level. Therefore, the signal to open long positions was not formed. There were also no sales since I did not wait for the reverse test from the bottom up of the 1.3870 level. As a result, the fall of the pound led to a revision of the technical picture of the pair.
The ideal option for buyers is now the formation of a false breakdown at the level of 1.3836, which was formed today in the first half of the day. Poor PMI reports for the US services sector will lead to a good entry point into long positions. Only in this scenario can we expect the pound to recover to the resistance of 1.3871 and return it to the control of buyers. A break of 1.3871 and a test of this area from top to bottom will form a new signal to buy GBP/USD and open a direct road to the maximum of 1.3922, which we did not reach today. A more distant target will be the range of 1.3978, where I recommend fixing the profits. If the pressure on GBP/USD persists in the afternoon, and the bulls do not show activity in the area of 1.3836, it is best to postpone long positions until the support update of 1.3799, where I recommend buying the pair immediately for a rebound with the aim of an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The initial task of the bears remains to protect the resistance of 1.3871, which they successfully returned today in the first half of the day. The formation of a false breakdown, together with strong data from the ISM on activity in the US private sector, form a good signal to sell the pound, which will push the pair to the support of 1.3836. Its repeated test will lead to the demolition of several buyers' stop orders and will collapse GBP/USD to a minimum of 1.3799, where I recommend fixing the profits. A more distant target will be the area of 1.3760. In the absence of active actions of sellers in the area of 1.3871, I recommend postponing sales until the test of the maximum of 1.3922, where you can open short positions immediately for a rebound based on a downward correction of 25-30 points within the day.
Let me remind you that no changes were recorded in the COT reports (Commitment of Traders) for June 29. Minimal movements in long and short positions indicate a wait-and-see position of traders, which coincides with the position of the Bank of England. If at the beginning of the summer it was possible to expect that the regulator would somehow change its attitude to the bond purchase program, then last week the governor of the Bank of England, Andrew Bailey, said that there are no problems with inflation yet, and now is not the time to cancel stimulus measures. It was the main reason for the problems with the growth of the British pound. But the data on the US labor market disappointed traders even more. It was the growth of unemployment that forced traders to close their long positions on the dollar against the pound, which led to a powerful bullish impulse at the end of last week, which will continue this week. But as we already know, as long as there is no serious inflationary pressure in the UK, the Bank of England is unlikely to rush to make changes to its policy, which will restrain the pound from sharp upward movements. The spread of the Indian strain of coronavirus in the UK creates additional difficulties with the full opening of the economy. Despite this, the optimal scenario remains the purchase of the pound with each good decline in pair with the US dollar. The COT report indicates that long non-commercial positions increased from the level of 51,445 to the level of 51,596, while short non-commercial positions increased from the level of 33,518 to the level of 33,873. As a result, the non-commercial net position decreased to the level of 17,723 from the level of 17,972. The closing price of last week decreased and amounted to 1.3878 against 1.3924.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 moving averages, which indicates an attempt by the bulls to continue the upward trend in the pair.
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:
The growth will be limited near the upper level of the indicator 1.4230. If the pair falls, the lower border of the indicator around 1.4130 will provide support.
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.
