To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3737 and the looming divergence on the MACD indicator. Let's look at the 5-minute chart and figure out what happened. An unsuccessful consolidation above 1.3737 and the inability of the MACD indicator to update yesterday's highs led to the formation of a false breakdown and an excellent entry point into short positions. As a result, the pair collapsed to the support of 1.3691, which was 2-3 points short of the test. In this regard, no other signals were formed to enter the market. From a technical point of view, little has changed compared to the morning forecast. Statements made by representatives of the Bank of England led to a decline in the pound. However, the overall picture remained upward. However, a breakthrough and a reverse test of the level of 1.3743 from top to bottom will form a new signal to buy GBP/USD, which will push the pair even higher – to the area of 1.3782. A breakdown of this area will also open a direct road to a large resistance of 1.3810, where I recommend taking the profit. A longer-range target will be a maximum of 1.3841. If the pressure on the pair returns in the afternoon, I advise you not to rush with purchases. An important task for the bulls will be to protect the support of 1.3696, where it will be possible to build the lower border of the new ascending channel. There are also moving averages that play on the buyers' side. The formation of a false breakout forms a good entry point into long positions. Otherwise, the optimal scenario for buying will be a test of the next support of 1.3661, but even there, it is best to wait for the formation of a false breakdown. I advise you to watch purchases of GBP/USD immediately for a rebound only from the minimum of 1.3634, based on an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears managed to give an excellent rebuff to the buyers of the pound. However, they have not yet managed to cope with more important tasks. The primary task of sellers is to regain control over the new support level of 1.3696. A breakthrough of this area and its reverse test from the bottom-up forms a signal to open short positions in the expectation of a decline to the level of 1.3661. A breakout of this range with a similar scenario will form another entry point into short positions to demolish the stop orders of the bulls and a larger fall to the area of the minimum of 1.3634, where I recommend fixing the profits. In the case of a repeated growth of the pound in the second half of the day in the resistance area of 1.3743, only the formation of a false breakdown there will form a sell signal for GBP/USD. I advise you to open short positions on the pound immediately for a rebound from the larger resistance of 1.3782, or even higher - from the maximum of 1.3810, counting on the pair's rebound down by 20-25 points within the day.
The COT reports (Commitment of Traders) for August 17 recorded a reduction in both short and long positions. The fact that representatives of the Bank of England are in no hurry to talk about changing monetary policy affects the activity of traders. Last week's data on retail sales and inflation in the UK once again proved that no one would rush to raise interest rates until the end of 2022. It is a fairly long time horizon. It put pressure on the British pound. But I have repeatedly noted that the lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the Bank of England in the future. The COT report indicates that long non-commercial positions decreased from the level of 44,750 to the level of 41,898.
In contrast, short non-commercial positions decreased from the level of 37,680 to the level of 37,2474, indicating an almost complete balance in the balance of power. As a result, the non-commercial net position slightly decreased and amounted to 4,651, compared to 7,070 a week earlier. The closing price of last week remained almost unchanged at 1.3840 against 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
A break of the upper limit of the indicator in the area of 1.3740 will lead to a new wave of growth. A break of the lower limit of the indicator in the area of 1.3700 will increase the pressure on 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.
