To open long positions on GBP/USD, you need:
In the first half of the day, no signals were formed to enter the market. If you look at the 5-minute chart, you will see how none of the levels I have indicated has been tested since the volatility of the GBP/USD pair leaves much to be desired. The priorities have changed for the second half of the day. Thus, the focus will be on new supports and resistances. It is unlikely that data on the US economy will provide significant support to the dollar, so buyers of the pound can count on updating the daily highs around 1.3883. A breakdown and a reverse test of this level from top to bottom form an entry point into long positions with an upward correction and a return to the resistance of 1.3925, where I recommend fixing the profits. A break in this range will lead to a larger upward correction of the pair and an update of the local maximum of last month at 1.3978. In the scenario of a repeated decline of GBP/USD during the US session to the lows of the day, it is necessary to try to protect the support of 1.3841. I recommend opening long positions from this level only if a false breakdown is formed. If there is no activity of buyers, the best solution is to take long positions immediately to rebound from the larger support of 1.3801. The next low is around 1.3759, from where you can also buy EUR/USD with the aim of an upward correction of 20-25 points within the day.
To open short positions on GBP/USD, you need:
The initial task of the bears is now to protect the resistance of 1.3883, which was formed following yesterday's results. A lot will depend on the reaction to the data on the US economy. If the bears do not show activity after the reports are released, the first short positions can be opened if a false breakdown is formed in the area of 1.3883. Such a scenario will return the pair to a downward trend, which will push it back to the minimum of today in the area of 1.3841. A breakdown of this level with a reverse test from the bottom up will hit the stop orders of the bulls and bring down GBP/USD to a new area of 1.3801, where I recommend fixing the profits. The longer-range target remains the 1.3759. In the absence of active sellers around 1.3883, I advise you to postpone sales until the next major resistance of 1.3925. I also recommend opening short positions from there only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from a new high in the area of 1.3978, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for August 3 recorded a reduction in short positions and a sharp increase in long ones. All this is explained by the results of the meeting of the Bank of England, where representatives again started talking that the attitude to monetary policy will change in the direction of tightening. It brought back the demand for the "sleeping all week" British pound, which allowed us to change the balance of power in the net position. After lifting all quarantine restrictions in the UK, the panic has also receded, which allows the economy to continue to "breathe deeply." Currently, there is a slight pressure on the pound. However, it is mainly due to excellent indicators on the American economy and the labor market. However, I advise you to stick to the strategy of buying the pound with each significant decline, as the big players do. The COT report indicates that long non-commercial positions increased 41,194 to the level of 43,119.
In contrast, short non-commercial positions decreased from the level of 46,878 to the level of 43,205, indicating continued purchases from major players. As a result, the non-commercial net position remained negative and amounted to -86 against -5,684 a week earlier. The closing price of last week jumped from the level of 1.3826 to 1.3891.
Signals of indicators
Moving averages
Trading is conducted below 30 and 50 daily averages, indicating the preservation of a small pressure on the pound, which buyers still can not get rid of.
Note: The author considers the period and prices of moving averages 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 lower limit of the indicator in the area of 1.3841 will lead to a fall in the pound. A break of the upper limit of the indicator in the area of 1.3865 will lead to a new wave of growth of 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 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.
