To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3810 and recommended making decisions from it. Let's look at the 5-minute chart and talk about what happened. The first attempt of buyers to gain a foothold above 1.3810 failed. As a result, a false breakout was formed and a good signal for opening short positions was formed. The downward movement from the entry point was about 30 points. However, we fell a couple of points short of the target level of 1.3771. Then the bulls regained the initiative and again pulled the pair to the resistance of 1.3810. Given that the technical picture of the pair has not changed in the first half of the day, it seems that the strategy for the American session will be similar to the European one.
The ideal option for buyers will be the formation of a false breakdown at the level of 1.3771, which forms a signal to open long positions in the hope of recovering to the resistance of 1.3810. Only a break of the level of 1.3810, which buyers failed to do in the first half of the day, as well as 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 1.3862. Please note that the moving averages pass just above the level of 1.3810, which may interfere with the quick plans of the bulls to return the market under their control. A more distant target will be a maximum of 1.3922, where I recommend fixing the profits. If the pressure on GBP/USD continues in the afternoon, and the bulls do not show activity in the area of 1.3771, it is best to postpone long positions until the support update of 1.3732. However, I also recommend opening long positions only if a false breakdown is formed. I recommend buying the pair immediately for a rebound only from the new low of this month in the area of 1.3674 with the aim of an upward correction of 25-30 points inside
To open short positions on GBP/USD, you need:
The initial task of the bears remains to protect the resistance of 1.3810, which was successfully done in the first half of the day. The formation of a false breakdown by analogy with the one I described just above, together with strong data on the US economy, forms a good signal to sell the pound, which will push the pair to the support of 1.3771. Only its breakdown will lead to the demolition of several stop orders of buyers and will collapse GBP/USD to a minimum of 1.3732, where I recommend fixing the profits. A more distant target will be the area of 1.3674. However, this is subject to the very deplorable state of the pound and the strong protocol of the Federal Reserve System, which is expected in the afternoon. In the absence of active actions of sellers in the area of 1.3810, I recommend postponing sales until the test of a larger resistance of 1.3862, 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 there are no special changes 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 so far 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 is likely to 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-profit positions increased from the level of 51,445 to the level of 51,596, while short non-profit positions increased from the level of 33,518 to the level of 33,873. As a result, the non-commercial net position decreased quite slightly, 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 below 30 and 50 daily averages, which indicates an attempt by the bears to continue the pressure on the pound.
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 1.3810 will lead to a sharp increase in the pound. A break of the lower limit of the indicator in the area of 1.3785 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.
