To open long positions on GBP/USD, you need:
In my morning forecast, I drew attention to the pound's problems, which may begin in the event of a breakout of the support of 1.3706. Let's look at the 5-minute chart and talk about where it was possible to enter the market. The breakout and reverse test of the low of 1.3706 led to the formation of an excellent entry point into short positions, which provoked a large sale of the British dollar to the area of 1.3672. Already closer to the middle of the day, a false breakdown was formed, which led to a buy signal. The focus will be shifted to data on the US labor market. If the report turns out to be worse than economists' forecasts, we can expect further growth of the pair and a larger upward correction to the resistance area of 1.3710, which buyers will focus on. However, the initial task of the bulls remains to protect the lows in the area of 1.3669. In the case of a decline in GBP/USD, forming a false breakdown forms a buy signal for an upward correction. A breakout and a test of 1.3710 from top to bottom form an additional signal to buy the pound, which will open up the opportunity to update the maximum of 1.3747, where I recommend fixing the profits. There are also moving averages that play on the side of the bears. The longer-range target remains the maximum of 1.3782. If the pressure on the pound returns and the bulls do not show anything in the support area of 1.3669 – the optimal scenario will be purchases from the new minimum of 1.3636, but only after forming a false breakdown. You can buy GBP/USD immediately for a rebound in the area of 1.3592 with the aim of an upward correction of 15-20 points within the day.
To open short positions on GBP/USD, you need:
The initial task of the bears remains to protect the resistance of 1.3710, below which they successfully broke through today in the first half of the day. The optimal scenario for opening short positions will be the formation of a false breakdown at this level, along with an excellent report on reducing the number of initial applications for unemployment benefits in the United States. Good data may strengthen the Fed's desire to resort to an earlier reduction in monetary policy, which will lead to a strengthening of the US dollar. In this case, the goal will be to break through the next support of 1.3669, below which it has not yet been possible to break through today. A break in this area can return serious pressure on the pair. The test of 1.3669 from the bottom up forms an additional entry point into short positions and will push GBP/USD even lower (to 1.3536), and there it is close to the minimum of 1.3591, where I recommend fixing the profits. If there are no active sellers around 1.3710, I advise you to postpone sales until the next major resistance of 1.3747. I recommend opening short positions only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from the local maximum in the area of 1.3782, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for August 10 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. Also, additional pressure on the pound was exerted by the report on inflation in the United States, which disappointed investors and coincided with economists' forecasts. It suggests that the Federal Reserve System will not rush to make changes in its monetary policy, especially against the appearance of another problem-disruptions with supply chains in the South Asian region. All this can seriously affect pricing and the economic recovery rates of several countries, including the UK. However, as before, 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 43,119 to the level of 44,750.
In contrast, short non-commercial positions decreased from the level of 43,205 to the level of 37,680, indicating continued purchases from major players. As a result, the non-commercial net position returned to the positive side and amounted to 7070, against -86 a week earlier. The closing price of last week fell from the level of 1.3891 to 1.3846.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily averages, which indicates a further decline in the pound.
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
In the case of an upward correction, the average border of the indicator in the area of 1.3725 will act as a resistance.
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.
