To open long positions on GBP/USD, you need:
Last Friday, I did not wait for the signals to enter the market. I suggest we take a look at the 5-minute chart and figure out what happened. Judging by what is happening now, things are not going well for the buyers of the pound. In my Friday morning forecast, I paid attention to the levels of 1.3111 and recommended making decisions on entering the market. Against the background of unsuccessful attempts by bears to fail the annual minimum after the release of fairly good fundamental statistics on the growth rate of the UK economy, bulls tried to take control of the market, which kept trading within a narrow side channel. Considering that we did not reach the levels indicated by me, I did not wait for signals to enter the market. In the afternoon, the technical picture was completely revised. However, even there we did not reach the expected levels before the test - a couple of points were missing, so I did not get good entry points into the market. And what were the entry points for the euro?
The next annual minimum for the British pound has been passed. Now the bears are aiming at 1.2976 and it is not yet clear what can help buyers not even turn the market around, but simply stop the observed trend. Strong data on the UK economy does not help, especially given the inflationary pressure and what is happening with prices in the country. All this has a very bad effect on the economy and slows down its growth - you can see the final result on the graph. And although the fall of the pound is limited, since we have clear aggressive actions of the Bank of England about interest rates ahead, however, do not forget that this week the Federal Reserve will hold a meeting at which interest rates in the United States will also be raised - this is a strong bullish signal for the dollar. Several economic statistics for the UK are not scheduled today, so the bulls will try to cling to the next annual lows. An important task during the European session is to protect the support of 1.2976, to which the pound is now gradually declining. Long positions from this level can be considered only after the formation of a false breakdown. Growth in this scenario will bring the pair back to the resistance of 1.3048, in the area of which there are moving averages playing on the sellers' side. Only a breakthrough and a reverse test of this area from top to bottom will lead to the demolition of several sellers' stop orders, allowing the bulls to increase long positions more actively. The target in this case will be the 1.3121 area. A more difficult task will be to reach the resistance of 1.3190 - this will deal a strong blow to the bearish trend observed in the afternoon of last week. I recommend fixing profits there. In the scenario of a decline in GBP/USD during the European session and the absence of bulls at 1.2976, it is best to postpone purchases against the trend until the next support of 1.2914 - this is a more reliable level. But I also advise you to open long positions there only when a false breakdown is formed. You can buy GBP/USD immediately for a rebound from 1.2856, or even lower - from the minimum of 1.2807, counting on a correction of 20-25 points within a day.
To open short positions on GBP/USD, you need:
Bears continue to control the market and now a lot will depend on their behavior at annual lows. If there is no surge in volatility in the first half of the day, most likely the pressure on the pair will remain. The fall of the pound may also continue at any moment due to the deterioration of the geopolitical situation in Ukraine, as well as problems in the UK economy, which abound due to excessively high inflation. The priority goal of the bears for today will be the support of 1.2976, reaching which it will be possible to relax once again and lock in profits. In the case of GBP/USD growth in the first half of the day, only the formation of a false breakdown at 1.3048 will lead to the first signal to sell the pound with the prospect of falling to the 1.2976 area. Just above 1.3048 there are moving averages playing on the side of the bears. A breakout and a reverse test of 1.2976 will increase pressure on the pound, which will continue the bearish trend and give another entry point to short positions with the expectation of falling to a minimum of 1.2914. The aggravation of the geopolitical situation will open the way to 1.2856 and 1.2807, where I recommend fixing the profits. In the case of GBP/USD growth during the European session and weak sellers' activity at 1.3048, it is best to postpone sales to the larger level of 1.3121, where we observed active actions of bears last Friday. I also advise you to open short positions there in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound from 1.3190 or even higher - from a maximum of 1.3244, counting on a correction of the pair down by 20-25 points within a day.
The COT reports (Commitment of Traders) for March 1 recorded a sharp increase in long positions and a reduction in short ones. This led to a reduction of the negative delta value to almost zero. However, you need to understand that now such reports are secondary, and the market is changing almost daily, flying by 100-200 points against the background of the ongoing geopolitical conflict that has affected almost the whole world. Most likely, the report next week will show a sharp demand for short positions, so it's best not to look too closely at the current figures yet. 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. The only thing that is clear for sure is high inflation in the UK, which will force the Bank of England to act more actively. Given the slowdown in economic growth and retaliatory sanctions from Russia, it is unlikely that the regulator will go for a sharper increase in interest rates - and this must be done, otherwise, inflation will devour not only the available incomes of the population but also sharply reduce them. The COT report for March 1 indicated that long non-commercial positions increased from the level of 42,249 to the level of 47,679, while short non-commercial positions decreased from the level of 48,058 to the level of 48,016. This led to the preservation of the negative value of the non-commercial net position at the level of -337 versus -5,809. The weekly closing price dropped to 1.3422 against 1.3592.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 moving averages, which indicates the return of sellers to the 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 in the pair, the lower limit of the indicator in the area of 1.2976 will act as support. In the case of growth, the upper limit of the indicator around 1.3115 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.
