To open long positions on GBP/USD, you need:
Weak data on GDP at the end of last week did not do much harm to the British pound, which, like the euro, after the minutes of the Federal Reserve's June meeting, rebounded from the lows of the month and aims to continue the recovery.
Nothing interesting about the UK economy today, so the pressure on the pound is unlikely to increase much. The best option for the bulls is to form a false breakout at the level of 1.3858, which generates a signal to open long positions in hopes that the pair would recover to resistance at 1.3906. Only a breakthrough of 1.3906 and a downward test of this area can create a new buy signal for GBP/USD and open a direct road to the 1.3938 high. The next target will be the area of 1.3978, where I recommend taking profits. Moving averages are just below the level of 1.3858, which also play on the side of the pound bulls. If the pressure on GBP/USD increases in the morning, and the bulls are not active in the 1.3858 area, it is best to postpone long positions until the 1.3809 support update, where you can buy the pair immediately on a rebound, counting on 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 is to protect the resistance at 1.3906. Forming a false breakout there will be a sell signal, which will return the bearish nature to the market and push the pair to support 1.3858. Quite a lot depends on the breakdown of this level, as the exit below will seriously hit the pair's prospect of leaving the horizontal channel at 1.3757-1.3906. Moving averages pass below 1.3858, which will become a problem for the bears. Only a reverse test of the level 1.3858 from the bottom up will result in creating another entry point into short positions for the purpose of pulling down the pair to 1.3809, where I recommend taking profits. If the bears are not active in the resistance area of 1.3906, I recommend postponing short positions until the test of a larger high at 1.3938, where you can open short positions immediately on a rebound, counting on a downward correction of 25-30 points within the day.
I recommend for review:
There are no particular changes in the Commitment of Traders (COT) report for June 29. Minimum movements in long and short positions indicate a wait-and-see position of traders, which coincides with the Bank of England's position. If at the beginning of the summer one could expect that the central bank would somehow change its attitude to the bond purchase program, then last week Bank of England Governor Andrew Bailey said that there are no problems with inflation so far and now is not the time to cancel stimulus measures. This was the main reason for the problems with the pound's growth. But traders were disappointed with the US labor market report. It was the rise in unemployment that forced traders to close their long positions in the dollar against the pound, which led to a strong bullish momentum at the end of last week, which is likely to continue this one. But as we already know, until serious inflationary pressures are noticed in the UK, the Bank of England is unlikely to rush to make changes to its policy, which will hold back the pound from sharp upward movements. The spread of the Indian strain of coronavirus across the UK poses additional challenges to fully opening up the economy. Despite this, the best scenario is to buy the pound for every good decline against the US dollar. The COT report indicated that long non-commercial positions rose from 51,445 to 51,596, while short non-commercial positions rose from 33,518 to 33,873. As a result, the non-commercial net position declined only slightly, to 17,723 from the level of 17,972. The closing price of the last week decreased and reached 1.3878 against 1.3924.
Indicator signals:
Trading is carried out above 30 and 50 moving averages, which indicates the likelihood of continued growth of the pound.
Moving averages
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 case the pair falls, the lower border of the indicator in the area of 1.3845 will act as a support. Growth will be limited by the upper level of the indicator around 1.3920.
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.
