To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3059 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. Too low volatility in the first half of the day, even against the background of very good data on the UK labor market, did not allow us to reach the levels indicated in the morning. Because of this, there were no signals to enter the market. The technical picture remained completely unchanged. And what were the entry points for the euro this morning?
The unemployment rate in the UK dropped to 3.9% in January this year, which is the best indicator in recent times. However, the market did not react to this in any way, since at the moment the situation has changed very much, and the deterioration of the geopolitical situation along with sanctions and a sharp rise in prices may negatively affect the British economy in the future. In the afternoon, several US data were released, which may further affect the market. Also, everyone is waiting for the results of the next meeting of representatives of Russia and Ukraine. Good news and positive results of negotiations can bring back demand for risky assets, including the British pound.
The primary task of buyers for today remains the protection of the 1.3002 support formed by the results of yesterday. This level does not play an important role, since when the pound returns to this range, the bulls will prefer to remain on the sidelines. In case of a decline, only the formation of a false breakdown at 1.3002 and weak US data will give a signal to buy GBP/USD to build at least some upward correction. When implementing such a scenario, the bulls will aim at the resistance of 1.3059, which they failed to get above yesterday. A breakdown and a test of this level from top to bottom will form an additional entry point and strengthen the position of buyers with an increase to the maximum of 1.3121 and the prospect of updating a new resistance of 1.3190. A more distant target will be the 1.3244 area, where I recommend fixing the profits. However, we will be able to reach this level only with very positive news and a reduction in the conflict between Russia and Ukraine. Under the scenario of the pound falling during the US session and the lack of activity at 1.3002, and most likely it will be, it is best to postpone purchases to the next minimum, 1.2932, or larger support of 1.2856. Only the formation of a false breakdown at these levels can leave a bearish trend and give an entry point in the expectation of a short-term rebound of the pair up. You can buy GBP/USD immediately for a rebound from 1.2807 and only to correct 30-35 points within a day.
To open short positions on GBP/USD, you need:
The sellers of the pound are not particularly showing themselves yet, but the market was on their side - the trend is bearish. Most likely, this calm will remain until tomorrow's decisions of the Federal Reserve System. Even expectations of a small upward correction in the pound today do not cause serious concerns - the growth will be seen as a good opportunity to sell at higher prices. The deterioration of the geopolitical situation will also play into the hands of sellers, but if it improves, the bears will quickly leave the market, which will lead to the rapid growth of the pound - pay special attention to this. Trading is already in the area of moving averages, which indicates some short-term market uncertainty. The primary task of sellers for the second half of the day is to protect the 1.3059 range. The formation of a false breakdown at this level will give an entry point into short positions to continue the bear market and the subsequent decline of the pair to the area of 1.3002. You will have to fight for this level. A breakdown and a reverse test from the bottom up of 1.3002 will lead to the demolition of several stop orders, which will dump GBP/USD to the lows of 1.2932 and 1.2856. A more distant target will be the 1.2807 area, where I recommend fixing the profits. If the pair grows during the American session and sellers are weak at 1.3059, it is best to postpone sales to the resistance of 1.3121. I also advise you to open short positions there only in case of a false breakdown. You can sell GBP/USD immediately for a rebound from the maximum of 1.3190, or even higher - from 1.3244, counting on the pair's rebound down by 30-35 points within a day.
The COT reports (Commitment of Traders) for March 8 recorded a sharp increase in both long and short positions. Some took advantage of the panic in the market, others had attractive prices. However, there were more of those who increased short positions, which led to an increase in the negative delta. This week, we will have a meeting of the Federal Reserve System, and how the American regulator will behave in the conditions of the highest inflation in the last 40 years is a big question. A more active policy on interest rates will increase the demand for the US dollar, which is already trampling the British pound almost every day to the next annual lows. We also remember that although Russia and Ukraine have sat down at the negotiating table, so far these meetings do not give any special results. Against this background, I recommend continuing to buy the dollar, since the bearish trend for the GBP/USD pair has not gone away. The only thing that now saves the pound from a major sell-off is high inflation in the UK, which will force the Bank of England to act more actively as well. The very next day after the Fed meeting, the Bank of England will hold a meeting. This is where a reversal of the pound may occur in the opposite direction, so when selling at the lows of GBP/USD, think about tomorrow. The COT report for March 8 indicated that long non-commercial positions increased from the level of 47,679 to the level of 50,982, while short non-commercial positions increased from the level of 48,016 to the level of 63,508. This led to an increase in the negative value of the non-commercial net position from -337 to -12,526. The weekly closing price dropped to 1.3113 against 1.3422.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates an active confrontation between buyers and sellers.
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 break of the lower limit of the indicator in the 1.3000 area will increase the pressure on the pound. A break of the upper limit of the indicator in the area of 1.3060 will lead to the growth of 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.
