To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3639 and recommended opening long positions from it, provided that a false breakdown is formed. Let's look at the 5-minute chart and analyze the entry point. At the first attempt of the bears to push through the area of 1.3639, the market stopped. And although the data on activity in the UK was not so good, the pressure on the pound did not return, which instilled confidence in buyers and led to the formation of a good entry point into long positions in the continuation of the upward correction. At the time of writing, the pair has already gone up about 60 points, and there are no signs of a correction yet. Important data on activity in the US economy will be released this afternoon. If the indicators turn out to be worse than economists' forecasts, the demand for the British pound may only increase. Therefore, the primary task of the bulls remains to protect the support of 1.3672. In the case of a decline in GBP/USD, a false breakdown will form a buy signal in the expectation of continuing the upward correction with an exit to a maximum of 1.3720, breaking above which will not be so easy. A breakout and a test of 1.3720 from top to bottom will form an additional signal to buy the pound, which will open up the opportunity to update the area of 1.3755, where I recommend fixing the profits. 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 1.3672 – the optimal scenario will be purchases from the new low of 1.3634, which was formed today in the first half of the day. You can buy GBP/USD immediately for a rebound in the area of 1.3603 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 is now to protect the resistance of 1.3720, which is now targeted by the buyers of the pound. The optimal scenario for opening short positions will be the formation of a false breakdown at this level, along with an excellent report on activity in the US services sector and the manufacturing sector. Good data can strengthen the pace of economic recovery and favorably affect the American labor market. In this case, the goal will be to break through the support of 1.3672, which the bears missed today. A breakdown of this area can return serious pressure on the pair. The test of 1.3672 from the bottom up forms an additional entry point into short positions and will push GBP/USD even lower - to 1.3634, where the moving averages are playing on the side of the bulls. A longer-term target will be the monthly minimum of 1.3603. In the absence of active sellers around 1.3720, I advise you to postpone sales until the next major resistance of 1.3755. I recommend opening 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 1.3782, 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 above 30 and 50 daily averages, indicating an upward correction for the pair.
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 event of a decline in the pound in the second half of the day, the lower border of the indicator around 1.3603 will act as 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.
