To open long positions on GBP/USD, you need:
Problems with the fuel crisis in the UK continue, which, in addition to all other problems on the world stage, continues to put pressure on the British pound, which collapsed yesterday against the US dollar to new annual lows. Let's take a look at the 5-minute chart and understand all the entry points for selling the pound. In my morning forecast, I paid attention to the level of 1.3521 and advised you to make decisions on entering the market. The breakthrough and reverse test of this level from the bottom up resulted in forming an excellent entry point into short positions. As a result, the pressure on the pound remained. Then there was a similar breakthrough and a reverse test of the 1.3485 level and 1.3452 level. At each signal, the pound fell by about 30-40 points. At the moment, there are no people willing to buy GBP/USD and are unlikely to appear in the near future. At least until the resolution of the problems with the fuel crisis and political battles in the US Senate on raising the national debt limit. Among the reports in the first half of the day, it is worth paying attention to the change in the UK GDP for the second quarter of this year. Even if the indicator turns out to be better than economists' forecasts, it will do little to help the pound, since traders are already more focused on the figures for the third quarter. Before thinking about buying the pound, you need to stop its decline. Only a false breakout at the level of 1.3419 generates a signal to open long positions against the trend in hopes of a recovery to 1.3466, where the moving averages are already located, limiting the pair's upward potential. A breakthrough and test of this level from top to bottom will create another entry point into long positions, aiming for GBP/USD growth to the intermediate resistance of 1.3505. The next target will be the area of 1.3550, where I recommend taking profits. If the GBP/USD pair falls further in the morning along the trend, it is best not to rush with long positions. The optimal scenario would be buying the pound from the low of 1.3372, but subject to forming a false breakout. I advise you to open long positions in GBP/USD immediately on a rebound in the 1.3308 area, or even lower - from 1.3193, counting on an upward correction of 15-20 points within the day.
To open short positions on GBP/USD, you need:
The initial challenge for the bears is to protect the 1.3466 resistance, which can be tested in case of very good Q2 UK data. Forming a false breakout at this level can seriously harm the bulls' plans who are counting on a correction today after yesterday's fall. If the bears manage to defend the above level, in this case, we can expect a further decline in GBP/USD along the trend to the area of the annual low of 1.3419. A breakthrough and reverse test of this area from the bottom up along with weak data on GDP and a worsening situation with the fuel crisis - all this will hit the next stop orders of the bulls and form an additional entry point into short positions with the goal of pulling down GBP/USD to 1.3372. With very active short positions of the pound during the speech of the representatives of the Federal Reserve, the target will be the lows of 1.3308 and 1.3193, where I recommend taking profit. If the bears are not active in the 1.3466 area, there will be no reason for panic. I advise you to postpone selling until the next major resistance at 1.3505, from where I also recommend opening short positions only if a false breakout is formed. Selling GBP/USD immediately on a rebound is possible from the high in the 1.3550 region, counting on a downward correction of 25-30 points within the day.
The Commitment of Traders (COT) reports for September 21 revealed both a sharp rise in short ones and an increase in those who bet on the pound's further growth. The Bank of England's monetary policy meeting last week had a significant impact on the sentiment of risky asset buyers. The decision to raise rates in November this year will provide support to bulls in case of any serious downward corrections in the pair, so it is best to bet on the growth of GBP/USD in the medium term. Deterioration in inflationary matters may force the BoE to act more aggressively, which is also another signal to buy the pound. The only problem that stands in the way of the bulls is the Federal Reserve, although it is not going to raise interest rates yet, but is also following the path of tightening monetary policy. The lower the pound falls, the more active buyers of risky assets will be, betting on real changes in the BoE's monetary policy in the future. The COT report indicated that long non-commercial positions rose from 44,161 to 51,910, while short non-commercials jumped almost one and a half times from 39,371 to 52,128, leading to a complete surrender of the bulls' advantage in the market and preponderance towards the bears. As a result, the non-commercial net position returned to its negative value and dropped from the level of 4,790 to the level of -218. The closing price of GBP/USD dropped 1.3837 to 1.3662 last week.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates a downward trend.
Moving averages
Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.
Bollinger Bands
In case of growth, the upper border of the indicator in the area of 1.3466 will act as a resistance.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
- MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet certain 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 short and long positions of non-commercial traders.
