To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3640 and recommended that you decide on entering the market from it. Let's look at the 5-minute chart and figure out what happened. A breakout and a reverse test of this range from the bottom up led to the formation of a fairly good signal to open short positions on the pound further along with the trend to update the next local lows. But given that today we are waiting for important decisions from the Federal Reserve System on monetary policy, we did not wait for a major sell-off of GBP/USD. From a technical point of view, the picture has not changed much compared to the morning forecast. The pound buyers have formed a new level of support, which they are now actively clinging to. Only the formation of a false breakdown in the area of 1.3632 forms a signal to open long positions against the trend, which will lead to an upward correction to the area of intermediate resistance of 1.3673.
Given that the entire focus will continue to be placed on the results of the Federal Reserve meeting, it is unlikely that buyers will be able to break above this range so easily. Only a test of this level from top to bottom will form an additional entry point into long positions in the expectation of stopping the bearish trend with a return to the level of 1.3713. A more distant goal will be a maximum of 1.3752, where I recommend fixing the profits. If the pressure on GBP/USD persists in the second half of the day, and the bulls do not show anything in the support area of 1.3632, it is best not to take risks with long positions against the trend. The optimal scenario will be the pound purchase from the level of 1.3599, but only after the formation of a false breakdown. I advise you to open long positions in GBP/USD immediately for a rebound in the area of 1.3562, or even lower - from 1.3530 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 to protect the resistance of 1.3673. The bears will count on the meeting of the Federal Reserve System and the news on the reduction of the bond purchase program. It may lead to a weakening of the positions of risky assets. However, a condition must be met: the program will be curtailed earlier than December of this year, as well as quite large volumes. Only the formation of a false breakout at the level of 1.3673 will weaken the position of the British pound and push the pair to an important daily low in the area of 1.3632, for which sellers will have to fight during the American session. A break and a test of this area from the bottom up will form an additional entry point into short positions, which will push GBP/USD even lower - to 1.3599, and there is a very close minimum of 1.3562, where I recommend fixing the profits. The farthest target for today will be the area of 1.3530. However, it will be available if the Federal Reserve System makes serious changes in its monetary policy. In the absence of active actions of the bears around 1.3673, I advise you to postpone sales until a new large resistance of 1.3713. 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 the maximum in the area of 1.3752, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for September 14 recorded a sharp positive dynamics of the net position and a fairly large influx of long non-commercial positions, along with a reduction in short ones. And although the British pound remains under pressure in pair with the US dollar, a clear decline in the trading instrument indicates a fairly high interest in long positions from major players. It is quite possible that the sharp increase in inflation in the UK last week forced many traders to reconsider their attitude to the monetary policy of the Bank of England in the direction of its possible tightening. However, the fact that representatives of the Bank of England are in no hurry to talk about these changes affects the activity of traders. I advise you to continue to adhere to buying the British pound with any good decline. 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 increased sharply from 29,348 to the level of 44,161.
In contrast, short non-commercial positions decreased 53,872 to the level of 39,371, which indicates a preponderance towards the buyers of the pound and the leveling of the market situation. As a result, the non-commercial net position returned to a positive value and increased from -24,524 to 4,790 a week earlier. The closing price of last week was almost unchanged and amounted to 1.3837 against 1.3838 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted below the 30 and 50 daily averages, keeping the pound's bear market.
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 1.3632 will lead to a new wave of decline in the pound. A break of the upper limit in the area of 1.3673 will lead to the pair's growth.
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.
