To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3129 and recommended deciding on entering the market. Let's look at the 5-minute chart and figure out what happened. The decline of the pound in the area of 1.3129 and the formation of a false breakdown there led to the formation of an excellent entry point into long positions. As a result, the bulls broke above 1.3169 without any problems, but before the reverse test of this level from top to bottom a couple of points were not enough, so it was not possible to enter the market additionally. At the time of writing, the pair has already gone up more than 100 points from the entry point and continues to grow. The technical picture for the afternoon has been completely revised. And what were the entry points for the euro this morning?
The high activity on the part of buyers of the pound is still not explained by anything, especially after yesterday's statements by the chairman of the Federal Reserve System on the topic of future interest rate hikes in the United States. To maintain the current bullish momentum, it is very important to reach the resistance of 1.3244 today. Otherwise, the bears will quickly return the pound along the upper boundary of the 1.3207 side channel, which I talked about in the morning, which will lead to a major sell-off of the pair in the afternoon. The release of fundamental statistics for the American session is not planned, so the bulls have a great chance to reach 1.3244. In case of a decline in the pair, it is important not to miss the level of 1.3179. Long positions from it can be considered only after the formation of a false breakdown. But, as I noted above, the more important task of the bulls will be the test of 1.3244, which may lead to the continuation of the bull market observed since March 14. Fixing above this range with an update of this area from top to bottom will allow buyers to get close to a new high of 1.3275. It is unlikely that there will be those who want to buy further, so I recommend fixing the profits. The 1.3314 area will remain a longer-range target. In the scenario of a decline in GBP/USD during the US session and the absence of bulls at 1.3179, it is best to postpone purchases against the trend until the next support of 1.3121, formed by the results of today. But I also advise you to open long positions there only when a false breakdown is formed. You can buy GBP/USD immediately on a rebound from 1.3089, or even lower - from a minimum of 1.3046, counting on a correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
The bears did not cope with the task set in the morning and are now in a kind of stupor, being more and more cautious with each penetration of large resistance levels. The priority target of sellers for today is the area of 1.3179, but it seems that now is the time to think about the protection of 1.3244. In case of a breakdown and a reverse test from the bottom up of 1.3179, I recommend opening short positions to reduce to the support of 1.3121. A breakout and a reverse test from the bottom up and this range will form an additional sell signal, which will give a direct path to the lows of 1.3089 and 1.3046, where I recommend fixing the profits. But, given the current bull market, the implementation of this scenario raises more and more questions. In the case of GBP/USD growth during the American session, only a false breakdown at 1.3244 will lead to the formation of a sell signal for the pound. If there is no activity at 1.3244, and after testing this area, the pressure on the pound should return as quickly as possible, it is best to postpone selling until the next major resistance at 1.3275. 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 1.3314, or even higher - from a maximum of 1.3353, counting on a correction of the pair down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for March 15 recorded a sharp reduction in long positions and only small changes in short ones. The last meeting of the Bank of England reflected badly on the British pound. Despite the increase in interest rates, which was expected, the regulator did not signal an increase in aggressive policy, preferring more dovish rhetoric, despite inflation, which is breaking long-term records in the UK. The discontent of the country's population complicates the life of the British regulator, although more aggressive actions in the current difficult geopolitical conditions may harm the economy more than help it. Now everything depends on how to cause the least harm, because the fight against inflation is just beginning, and what will happen this spring is a mystery to many. Against this background, traders are in no hurry to buy the British pound, which shows a rather large weakness in pair with the US dollar. The Federal Reserve meeting was also the central event of last week. As a result, the committee raised interest rates by 0.25%, which did not lead to serious changes in the market, as many expected such decisions. 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 eventually force the Bank of England to act more actively. The COT report for March 15 indicated that long non-commercial positions decreased from 50,982 to 32,442, while short non-commercial positions decreased from 63,508 to 61,503. This led to an increase in the negative value of the non-commercial net position from -12,526 to -29,061. The weekly closing price dropped to 1.3010 against 1.3113.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by buyers to return the market under their control.
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 case of a decline, the average border of the indicator around 1.3165 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 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.
