To open long positions on GBP/USD, you need:
In the first half of the day, there were several interesting signals for entering the market. Let's look at the 5-minute chart and talk about what happened. The first false breakdown of the 1.3592 level formed an excellent entry point into short positions, which led to a decline in the pound to the 1.3570 area, where the pressure quickly dried up. A similar entry point was formed again closer to the middle of the day. However, the initiative of buyers ended even faster than the first time. Now the situation is quite complicated, and the market is more likely to be on the side of the buyers of the pound, which is about to achieve a breakdown of the new resistance of 1.3603. From a technical point of view, nothing much has changed.
All buyers need now is an increase above the resistance of 1.3603, which may occur in the case of weak data on the US labor market. Only such a scenario will help compensate for the losses observed yesterday. A breakout and a reverse test of 1.3603 from top to bottom form a buy signal for GBP/USD, which will push the pair to the area of 1.3642. A test of this area will be evidence of a return to the bull market. Its breakdown will open a direct path to the resistance of 1.3690, where I recommend fixing the profits. In general, against the background of the absence of important fundamental statistics and in the afternoon, the market today will be on the side of buyers of the pound. If the pressure on GBP/USD returns during the US session, I advise you not to rush into purchases. An important task for the bulls will be to protect the support of 1.3554. Only the formation of a false breakdown there will form a good entry point into long positions. Otherwise, the optimal scenario for buying will be a test of the next support of 1.3491. However, it is best to wait for the formation of a false breakdown. I advise you to look at long positions of GBP/USD immediately for a rebound only from the minimum of 1.3437, based on an upward correction of 25-30 points within a day.
To open short positions on GBP/USD, you need:
Bears are actively resting in the resistance area of 1.3603. However, this is not enough to keep the pressure on buyers who managed to understand that there is no one else above 1.3603, except for sellers' stop orders. The main task for the second half of the day for sellers will be the protection of 1.3603. The formation of a false breakdown at this level will lead to a new signal to open short positions in continuation of the downward correction observed yesterday throughout the day. The sellers' next task will be to regain control over the new support level of 1.3554. A breakthrough of this area and its reverse test from the bottom up will form a signal to open short positions in the expectation of a decline in the pair to 1.3491. The breakdown of this range also forms another entry point into short positions to demolish the bulls' stop orders and a larger fall to a minimum of 1.3437, where I recommend fixing the profits. If the pound recovers and there is no willingness to sell above 1.3603, only the formation of a false breakdown in the next resistance area of 1.3642 will be a signal to open short positions in GBP/USD. I advise selling the pound immediately for a rebound from a larger resistance of 1.3690, or even higher - from a maximum of 1.3726, counting the pair's rebound down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for September 28 recorded both a sharp increase in short ones and an increase in those who bet on further growth of the pound. The British pound has been falling almost all week amid the fuel crisis that has flared up. Problems in supply chains led to disruptions in fuel supply to gas stations, and an acute shortage of drivers forced British Prime Minister Boris Johnson to involve the military in this. The corresponding reaction of buyers of risky assets followed immediately, and the pound collapsed against the US dollar. Strong data on the growth of the UK economy in the 2nd quarter of this year, which were revised upwards, did not help the pound much. However, the pressure on the pair decreased slightly, and traders recalled the statements of the Bank of England on monetary policy that decisions on its change could be made as early as November this year. The only problem that stands in the bulls' way remains the US Federal Reserve, which is also on the path of tightening monetary policy. I have repeatedly advised buying the pound with its significant corrections. So it happened last week. After a sharp decline, traders took advantage of the moment and bought it off at attractive prices. The COT report indicates that long non-commercial positions increased from 51,910 to the level of 57,923.
In contrast, short non-commercial positions jumped from the level of 52,128 to the level of 55,959, which led to a partial increase in the advantage of buyers over sellers. As a result, the non-commercial net position regained its positive value and grew from -218 to the level of 1964. The closing price of GBP/USD rose to 1.3700 against 1.3662 at the end of the week.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, indicating buyers of the pound to return to the 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 breakthrough of the upper limit of the indicator in the area of 1.3603 will lead to a new wave of growth of the pound. A break of the lower limit in the area of 1.3554 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.
