To open long positions on GBP/USD, you need:
The first half of the day passed quite calmly. In my forecast, I paid attention to several levels that are relevant even now, because it was not possible to get to them. Low volatility against the background of the absence of important fundamental statistics scares off new potential buyers of the pound before tomorrow's meeting of representatives of the EU and the UK on compliance with the protocol of Northern Ireland. From a technical point of view, nothing has changed for the second half of the day. Let's hope that the market will not let you get bored.
I advise you to pay attention to the Fed-Philadelphia manufacturing index and the number of initial applications for unemployment benefits. The lack of progress on these indicators may increase pressure on the dollar, which will strengthen the position of the British pound. However, in my opinion, the best option to buy in the current conditions against the trend is a downward correction to the support area of 1.3460 and the formation of a false breakdown there. Such a scenario can be implemented after the release of macroeconomic indicators for the United States of America. At this level, there are also moving averages that play on the side of the bulls. An unsuccessful attempt to break 1.3460 will keep the chance of an upward correction of the pair and form a good entry point into long positions to update 1.3521. Only a breakdown and a test of this level from top to bottom will open the way to a maximum of 1.3567, where I recommend fixing the profits. A more distant target will be the 1.3605 level. Under the scenario of a decline in the pair in the afternoon and the absence of bull activity at 1.3460, the pressure on the pound may seriously increase – statements by representatives of the Federal Reserve System may contribute to this. In this case, I advise you to open new long positions only after a false breakdown in the area of 1.3411. You can watch GBP/USD purchases immediately for a rebound from the week's minimum of 1.3354, or even lower - from the support of 1.3308, counting on a correction of 25-30 points inside the day.
To open short positions on GBP/USD, you need:
The bears have run out of arguments and can only wait and hope for bad news on the issue of Brexit, which many, I think, have already forgotten. But in order not to "fall face down in the dirt", the sellers of the pound should try very hard to protect the resistance of 1.3521, which we did not reach during the European session. Only the formation of a false breakdown there will lead to the formation of a good entry point into short positions, followed by a decline in GBP/ USD to the area of 1.3460, where the moving averages are, limiting the pair's downward potential. Breaking through this range will be an equally important task for sellers. The 1.3460 test from the bottom up forms an additional signal to open new short positions to reduce to the lows of the week: 1.3411 and 1.3354, where I recommend fixing the profits. If the pair grows during the US trading and there are no sellers at the level of 1.3521, it is best to postpone sales to a larger resistance of 1.3567. I advise you to open short positions immediately for a rebound from 1.3605, or even higher - from a new maximum in the area of 1.3649, counting on the pair's rebound down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for November 9 recorded an increase in short and a sharp reduction in long positions, which led to the appearance of a negative delta. Weak data on GDP growth in the UK in the 3rd quarter of this year, as well as the risk of a more serious slowdown in retail sales in the 4th quarter due to high inflation - all this led to a fall in the pound and continued pressure on it. An important point was the deterioration of the situation around the Server Ireland protocol, which the UK authorities plan to suspend in the near future, to which the European Union is preparing to introduce certain retaliatory measures – this does not add confidence to buyers of the British pound. At the same time, in the United States of America, we are witnessing an increase in inflation and increased talk about the need for an earlier increase in interest rates next year, which provides significant support to the US dollar. However, I recommend sticking to the strategy of buying the pair in case of very large falls, which will occur against the background of uncertainty in the policy of the central bank. The COT report indicates that long non-commercial positions decreased from the level of 57,255 to the level of 54,004, while short non-commercial positions strengthened from the level of 42,208 to the level of 66,097. This led to a change in the non-commercial net position in the negative direction. The delta was -12,093 against 15,047 a week earlier. The weekly closing price of GBP/USD has significantly collapsed as a result of the policy of the Bank of England from 1.3654 to 1.3563.
Signals of indicators:
Trading is conducted above 30 and 50 daily moving averages, which indicates a possible continuation of the upward correction.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
A breakthrough of the upper limit of the indicator in the area of 1.3500 will lead to a new wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.3460 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 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 the short and long positions of non-commercial traders.