To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3542 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. I said that the lack of fundamental statistics will keep the demand for the pound. Another unsuccessful attempt by bears to break below 1.3542 led to the formation of an excellent entry point into long positions in continuation of the upward trend observed yesterday. As a result, the pound rose by 45 points, and the bulls achieved a breakdown and consolidation above 1.3577. The test of this level from top to bottom led to the formation of a buy signal in continuation of the bullish trend, however, in my opinion, the technical picture for the second half of the day has changed, so it is better to wait with purchases. And what were the entry points for the euro this morning?
During the American session, we are waiting for not very important data on the change in the volume of stocks in wholesale warehouses in the United States. A lot more important will be interviews with representatives of the Federal Reserve Michelle Bowman and Loretta Mester. The tone of their statements may determine the short-term direction of the US dollar - especially in the context of very important data on the consumer price index, published tomorrow. The key task of the bulls in the second half of the day will be to protect the support of 1.3547, formed following the results of the European session. There are also moving averages that play on the buyers' side. Having missed the pound lower, the bulls risk losing control of the upward trend again. Purchases from this range can be made only if a false breakdown is formed, which may occur during a speech by representatives of the Fed. This forms another entry point into long positions by analogy with the one I discussed above. Weak data on the US economy will also return demand for the British pound. In addition, buyers need to go above the level of 1.3586, which opens a direct road to monthly highs. A breakout and a test of this range from top to bottom form an additional buy signal with a rise to 1.3623, where I recommend fixing the profits. In the scenario of a decline in GBP/USD during the US session and the absence of bulls at 1.3547, it is better not to rush into buying risky assets. I advise you to wait for the test of the next major level of 1.3509. Only the formation of a false breakdown will give an entry point to long positions. You can buy the pound immediately for a rebound from 1.3477, or even lower - from this month's minimum of 1.3445, counting on a correction of 20-25 points within a day.
To open short positions on GBP/USD, you need:
Bears have so far shown everything they are capable of, so the market remains under the control of buyers. A lot will depend on whether the bulls will be able to pick up the resistance of 1.3586 today, as well as close the trading day above this range. Although it's enough to update yesterday's highs. The primary task of sellers is to protect 1.3586 since it will be another "suicide" to issue a pound above this level. The formation of a false breakdown together with strong statistics on the United States - all this forms an entry point into short positions. It is possible to count on the return of the bear market and the decline of the pair to the support area of 1.3547, where the moving averages are playing on the side of the bulls, only after hawkish statements from representatives of the Federal Reserve System. A breakdown and a test of this range from the bottom up will give an additional entry point into short positions to fall to 1.3509 and 1.3477, where I recommend taking the profits. If the pair grows during the American session, as well as weak sellers' activity at 1.3586, it is best to postpone sales to a monthly maximum of 1.3623. I advise you to open short positions there also in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound from 1.3683, or even higher - from the maximum in the area of 1.3739, counting on the pair's rebound down by 20-25 points within a day.
The COT reports (Commitment of Traders) for February 1 recorded a sharp increase in short positions and a reduction in long ones. All this led to an increase in the negative value of the delta. However, it should be understood that the report does not take into account the results of the meeting of the Bank of England, at which it was decided to raise interest rates. Despite this, it did not help the pound much, since everyone understands that such policy changes were made neither from a good life, but in the fight against high inflation. Given that the British economy is currently going through hard times and the pace of economic growth may seriously slow down - the increase in rates did not lead to a rapid increase in the British pound. We should not forget about the increase in interest rates by the Federal Reserve System in March this year, which will be an additional deterrent for buyers of GBP/USD. Some traders expect that the central bank may resort to more aggressive actions and raise rates by 0.5% at once, rather than by 0.25% - this will become a kind of bullish signal for the US dollar. The COT report for February 1 indicated that long non-commercial positions decreased from the level of 36,666 to the level of 29,597, while short non-commercial positions increased from the level of 44,429 to the level of 53,202. This led to an even greater increase in the negative non-commercial net position from -7,763 to -23,605. The weekly closing price dropped from 1.3488 to 1.3444.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by buyers to resume the bull market.
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.
Bollinger Bands
In the case of a decline, the lower limit of the indicator around 1.3530 will act as support.
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.
