To open long positions on GBP/USD, you need:
The levels were not tested in the first half of the day. Accordingly, it was not possible to wait for the formation of signals for entering the market. Let's look at the 5-minute chart. The ultra-low volatility after yesterday's inflation data indicates that many traders do not have further benchmarks for trading. Since the situation with changes in the monetary policies of the Federal Reserve System and the European Central Bank is not clear, and it is impossible to rely more on the current fundamental statistics. The published reports on the UK GDP coincided with economists' forecasts. Respectively, there was no market reaction to these data. The focus is shifted to American statistics, which are also unlikely to affect the balance of power significantly. In the case of strong data on the labor market, to continue the upward correction, the bulls will need to protect the support of 1.3847, which the pair almost approached at the time of writing and on which the moving averages are located, playing on the side of buyers of the pound. If a false breakdown is formed at this level, I advise you to open long positions to restore the pair to the first resistance of 1.3886, which could not be broken above yesterday. A breakout and a test of this area form an additional point for buying the pound to expect a return to the maximum of 1.3926, where I recommend fixing the profits. The longer-range target will be the resistance of 1.3955. If there is no activity of buyers in the area of 1.3847, I advise you not to hurry with purchases. The best solution will be long positions immediately to rebound from the larger support of 1.3812, or even lower - from the minimum of 1.3769 to an upward correction of GBP/USD within the day by 20-25 points up.
To open short positions on GBP/USD, you need:
The initial task of the bears remains to protect the resistance of 1.3886, above which it was not possible to break through yesterday. Strong data on the US labor market and the producer price index will help the bears form a false breakout at 1.3886, which will return pressure on the pound and form a signal to open short positions to reduce the pair to a minimum of 1.3847. A breakdown of this level with a reverse test from the bottom up will push GBP/USD to 1.3812, where I recommend fixing the profits since it will not be easy to break below the monthly lows. In the absence of active sellers around 1.3886 and weak fundamental statistics, there may be those who want to buy GBP/USD against the background of yesterday's euphoria after the inflation data. I advise you to postpone selling until the next major resistance of 1.3926. I recommend you to open short positions from there only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from the local maximum in the area of 1.3955, 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 in the near future, 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 from 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 above 30 and 50 daily averages, indicating an attempt by the bulls to keep the market under their control somehow.
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 upper limit of the indicator in the area of 1.3875 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.
