To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3417 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. A sharp rise above this range even before the opening of the European session seemed to be able to continue the upward potential of the pair, but, as we can see, no people were willing to continue buying the pound. A false breakdown and a return under 1.3417, followed by a test of this range from the bottom up, led to the formation of a sell signal for the pound, which resulted in a large sale and brought about 40 points of profit. We never reached the designated target in the area of 1.3362. Therefore, for the second half of the day, the technical picture has changed a little. And what were the entry points for the euro this morning?
The American session is very important since it is during that 12-hour ultimatum put forward by Russia on the acceptance of several demands by the Ukrainian authorities. Most likely, official Kyiv will not make concessions, which will lead to another military aggression by the Russian army. This will catalyze building up short positions on the pound and buying safe-haven assets, which can now be attributed to the US dollar. In the afternoon, several important fundamental statistics on the American economy are released, which can also become a catalyst for increasing short positions in the continuation of the bear market, so I advise you not to rush with purchases. The key task of the bulls will be to protect the 1.3340 support, as its breakdown will only increase pressure on the pair and open a direct path to yesterday's lows. The best option, of course, will be purchases in case of a false breakdown at the level of 1.3340. However, immediately after that, active growth of the pair should occur. If it is not there, and the pound continues to hover around the level of 1.3340, I advise you to postpone long positions to a minimum of 1.3276. Only the formation of a false breakdown there will give an entry point to long positions. You can buy the pound immediately on a rebound from 1.3232, or even lower - from a minimum of 1.3173, counting on a correction of 20-25 points within a day. To stop the bearish trend, bulls need to try to close the day above 1.3389, which was formed at the end of the first half of the day, which will not be so easy to do. A breakthrough and a test of this range after very weak data on changes in the level of spending and income of the US population for the worse, as well as after a decrease in the volume of orders for durable goods, can turn everything upside down. This will lead to the formation of a new buy signal and then to a possible increase in the area of 1.3435 – the maximum of today. A more distant target will be the 1.3489 area, where I recommend fixing the profits.
To open short positions on GBP/USD, you need:
Bears continue to control the market and their main task is to close the trading week below 1.3389. This will create even more technical problems for traders who yesterday were counting on a quick "comeback" of the pound after the failure to a minimum of 1.3276. The intensification of military operations on the territory of Ukraine will lead to a new wave of decline in the pair. The formation of a false breakout at 1.3389 forms an excellent entry point into short positions, followed by a decline and a breakdown of the 1.3340 support. The lack of activity on the part of buyers there, as well as a breakdown and a reverse test of this level from the bottom up, will give an additional entry point into short positions to fall to 1.3276 and 1.3232. A more distant target will be the 1.3173 area, where I recommend fixing the profits. If the pair grows during the American session, as well as weak sellers' activity at 1.3389, where the moving averages playing on the side of bears are held, it is best to postpone sales. The demolition of 1.3389 may lead to a sharp increase in the pound. In this case, I advise you to sell GBP/USD immediately for a rebound from 1.3435, or even higher - around 1.3489, counting on a correction within the day by 20-25 points.
The COT reports (Commitment of Traders) for February 15 recorded a sharp increase in long positions and a reduction in short ones. This led to the return of the delta of its positive value. Although the results of the Bank of England meeting did not come as a surprise, clear hints from the regulator on a more aggressive tightening of the monetary policy fueled the appetite for risks from major players. If it were not for the ongoing conflict between Russia and Ukraine, which has reached a new level, one could count on a more active recovery of the pound. In the meantime, further demand for risky assets is questionable. Given that the British economy is currently going through hard times and at any moment the pace of economic growth may seriously slow down, an increase in rates may harm the pace of recovery in the near future. However, optimism is inspired by the recent good report on retail sales, which implies strong growth in the indicator. The fact that inflation in January remained at the same levels and practically did not change year-on-year may affect the plans of the Bank of England, which will moderate the pace of policy tightening. Further geopolitical events around Russia and Ukraine, as well as the decisive actions of the Federal Reserve System regarding future interest rates in March of this year - all this will continue to put pressure on buyers of the pound. Some traders expect that the US 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 15 indicated that long non-commercial positions increased from 44,709 to the level of 50,151, while short non-commercial positions decreased from the level of 53,254 to the level of 47,914. This led to an increase in the non-commercial net position from -8,545 to 2,247. The weekly closing price remained unchanged at 1.3532 versus 1.3537.
Signals of indicators:
Moving averages
Trading is below 30 and 50 daily moving averages, which indicates a bear 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 growth, the upper limit of the indicator around 1.3435 will act as resistance.
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.
