To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3394 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. Moderate data on activity in the UK services sector did not allow the pound to build growth with the update of a large resistance level of 1.3435. However, after the pressure on the pair returned and fell below the level of 1.3394, it was possible to observe its reverse test from the bottom up. This led to the formation of a sell signal. At the time of writing, the pair has gone down about 25 points, but I have not yet seen a major drop. And what were the entry points for the euro this morning?
While trading will be conducted below 1.3394, we can expect a further decline to the level of 1.3350. The meeting of Russia and Ukraine will not take place in the near future, which will also put additional pressure on the pair in the afternoon. During the US session, several data is released that may have a positive impact on the US dollar, indicating the good state of the US economy. Federal Reserve Chairman Jerome Powell also speaks, which could lead to another wave of dollar growth. Despite yesterday's statements by the head of the Fed, the situation with inflation in the United States is likely to continue to deteriorate, which will force the central bank to act more aggressively. The bulls' initial task in the afternoon will be to protect the 1.3350 support, where the moving averages are playing on their side. The most optimal option, of course, will be purchases in the event of a decline and the formation of a false breakdown there. This scenario can be realized after the release of data on the index for the US services sector from ISM. However, after a false breakdown, active growth of the pair should occur. If this does not happen, most likely the pressure on the pound will remain. In this case, I advise you to postpone long positions to a minimum of 1.3314, where buyers of the pound also showed themselves yesterday. 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 1.3270, or even lower - from a minimum of 1.3232, counting on a correction of 20-25 points within a day. To stop the bearish trend, bulls also need to try to close the day above 1.3394, which they missed in the first half of the day. However, in the current conditions, it will not be so easy to do this. A breakthrough and a test of 1.3394 after very weak US data will lead to a continuation of the upward correction of the pound. In this case, we can count on further growth in the area of the highs: 1.3435 and 1.3468.
To open short positions on GBP/USD, you need:
The bears have declared themselves, but so far this has not led to a major sale. There is hope that the US data will come out good enough to once again prove to the Fed chairman the strength of the American economy. The formation of a false breakout at 1.3394 is the nearest resistance level, forming an excellent entry point into short positions, followed by a decline and a breakdown of support at 1.3350. The lack of activity on the part of buyers there, as well as a reverse test of this level from the bottom up, will give an additional entry point into short positions to fall to 1.3314 and 1.3270. The further target will be the 1.3232 area, where I recommend fixing the profits. In case the pair grows during the US session, as well as the Fed Chairman's soft rhetoric regarding interest rates remains, it is best to postpone sales. The demolition of 1.3394 may lead to a sharp increase in the pound against the background of sellers' stop orders. In this case, I advise you to open short positions GBP/USD after a false breakdown in the area of 1.3435 - the upper limit of the side channel from February 25, or sell immediately for a rebound from 1.3468, counting on a correction within the day by 20-25 points.
The COT reports (Commitment of Traders) for February 22 recorded a sharp increase in short positions and a reduction in long ones. This again led to the return of the negative value of the delta - the market continues to maintain equilibrium even in the conditions of military operations. In the context of a tough geopolitical conflict that has affected almost the whole world, it is not surprising that short positions on risky assets are only beginning to increase. This report has not yet affected the sell-off that was observed at the end of last week, so it's too early to talk about real figures. It makes no sense to talk about what the policy of the Bank of England or the Federal Reserve System will be since, in the event of an aggravation of the military conflict, it will not matter at all. Now Russia and Ukraine have sat down at the negotiating table, and much will depend on the results of these meetings - there will be a lot of them. In the current conditions, it will not be too correct to consider the COT report, especially considering its secondary information for the trader. I advise you to be quite careful about risky assets and buy the pound only as the tense relations between Russia, Ukraine, the EU, and the USA weaken. Any new sanctions actions against the Russian Federation will have serious economic consequences, which will affect the financial markets. The COT report for February 22 indicated that long non-commercial positions decreased from the level of 50,151 to the level of 42,249, while short non-commercial positions increased from the level of 47,914 to the level of 48,058. This led to the formation of a negative value of the non-commercial net position from the level of 2,247 to the level of -5,809. The weekly closing price rose to 1.3592 against 1.3532.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which keeps buyers hoping for the continued growth of the pound.
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
A breakthrough of the upper limit of the indicator in the area of 1.3415 will lead to a new wave of growth. A break of the lower limit of the indicator in the area of 1.3350 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.
