To open long positions on GBP/USD, you need:
In my forecast for the first half of the day, I paid attention to the resistance of 1.3914 and recommended making decisions based on this level. Let's look at the 5-minute chart and talk about what happened. The formation of a false breakout and the return of the pound under 1.3914 led to the formation of a good entry point into short positions. However, the bulls managed to temporarily return the pair above this level, which indicated that they maintained control on their side even in the absence of good fundamental statistics, considering that the GBP/USD has not gone down? It was decided to move the stop orders to the nearest daily maximum, which subsequently worked, bringing a small loss. For the second half of the day, the technical picture has changed. The focus of buyers is now shifted to the resistance of 1.3929, which is also yesterday's highs. Only a breakthrough and a test of this level from top to bottom will lead to the formation of a signal to open long positions in the continuation of the pound's growth. However, few people will want to do this since it is clear that it is unlikely to get above the maximum of last month before the Bank of England's monetary policy meeting. In the growth above 1.3929, the nearest target of the bulls will be the resistance of 1.3976. A similar breakout with a top-down test forms another entry point into long positions based on the 1.4019 update, where I recommend fixing the profits. In the scenario of a decline in GBP/USD in the second half of the day, buyers will have to think carefully about protecting the support of 1.3890, which was formed following the morning session results. Only the formation of a false breakdown, together with weak data on the US economy, will lead to a signal to open long positions in the hope of restoring the pair and continuing the upward trend. In the absence of active actions on the part of the bulls in the area of 1.3890, it is best to postpone long positions until the low of 1.3845 is updated, where you can buy the pound 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 task of the bears remains to protect the resistance of 1.3929, and you will have to try hard. If the seller has remained there statically since yesterday, then the movement after a false breakdown at 1.3929 down should be formed relatively quickly. In this case, sellers will aim to update today's lows in the area of 1.3890, just above which the moving averages are playing on the buyers' side. The breakdown of this level will depend on the data on the US economy, and only a bottom-up test of the area of 1.1890 will hit the stop orders of the bulls and push the pound to the next support of 1.3845 where you should think about profit-taking. The area of 1.3807 remains the longer-range target. In the absence of active actions of sellers in the area of 1.3929, I advise you to postpone sales until the next major resistance of 1.3976 or open short positions on GBP/USD immediately for a rebound from 1.4019, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for July 27 recorded a reduction in long positions. However, sellers also did not insist and partially reduced their volume of positions. The growth of the pound throughout the week allowed the GBPUSD pair to return to monthly highs. However, it was not possible to gain a foothold higher. The panic after the lifting of all quarantine restrictions in the UK has receded, and now the main focus this week will be placed at the meeting of the Bank of England on monetary policy. The European Central Bank and the Federal Reserve System did not change anything. Most likely, the Bank of England will also do the same. Before abandoning the stimulus measures, the Bank of England committee members will surely wait for accurate data on how things are going on in the labor market. It is expected that a large-scale government program to support the labor market will be completed as early as September of this year. It may force the regulator to take a longer wait-and-see position since the central bank is not experiencing any special problems with inflationary pressure yet. If the Bank of England representatives start talking more about plans to reduce the bond purchase program, this will provide significant support to the pound. I advise you to stick to the strategy of buying the pair with each significant decrease in it, as the big players do. The COT report indicates that long non-commercial positions decreased from 44,223 to the level of 41,194.
In contrast, short non-commercial positions decreased from the level of 47,720 to the level of 46,878, indicating a cautious approach to sales at current highs. As a result, the non-commercial net position remained negative and amounted to -5,684 against -3,496 a week earlier. The closing price of last week jumped from the level of 1.3668 to 1.3826.
Moving averages
Trading is conducted above the 30 and 50 daily averages, which indicates the probability of further growth of the pound according to 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 case of a decline in the pair, the average border of the indicator in the area of 1.3890 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 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.
