In my morning forecast, I paid attention to the levels of 1.3019 and 1.3050 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out where and how you could earn. A false breakdown at 1.3019 at the beginning of European trading after weak statistics on GDP and industrial production in the UK led to a signal to open short positions. As a result, the pound dropped by 30 points, but we fell just a little short of 1.2984. The return to 1.3019 and the reverse test from top to bottom was a buy signal, which returned the pound to 1.3050, allowing it to pick up about 30 more points. A false breakout at 1.3050 led to a sell signal, which I described in detail in the morning forecast. At the time of writing, the pair has gone down about 20 points, and the pressure on the pound remains. And what were the entry points for the euro this morning?
To open long positions on GBP/USD, you need:
In the afternoon, the technical picture for the pound has changed. Most likely, the fight will be for 1.3025 - a new level of support that was formed during the European session. Even against the background of the fact that there are no important statistics for the United States, statements by representatives of the Federal Reserve System may lead to the pair falling into this range. Therefore, the primary task of the bulls will be to protect them. A false breakdown at this level will lead to the formation of a buy signal, similar to what I discussed above. In this case, we can count on a further correction of the pair to the area of 1.3071. A break in this range will result in the closing of short positions and the pound's growth in the area of 1.3104, where I recommend fixing the profits. The 1.3133 area will be a more distant target, but it will not be so easy to reach it in the current conditions. The only good news in geopolitics will be able to actively move the pound up. In the scenario of a decline to 1.3025 and the inability of bulls to protect this level, most likely, the pair will fall to a minimum of 1.2990, where I advise entering the market only with a false breakdown. You can buy GBP/USD against the trend immediately for a rebound from 1.2950, or even lower - in the area of 1.2911 and only with the aim of correction of 30-35 points within a day.
To open short positions on GBP/USD, you need:
The bears missed the morning control over the market, which they received after the rather weak economic data for the UK for February this year: GDP turned out to be worse than economists' forecasts, and the volume of industrial production was seriously reduced altogether. The primary task of sellers is to protect the nearest resistance of 1.3071, it is very undesirable to release a pair above which. The formation of a false breakdown at this level, together with hawkish statements by FOMC members Michelle Bowman, Rafael Bostic, and Charles Evans, will give another entry point into short positions to strengthen the bear market, followed by a decline in the pair to the area of 1.3025. It seems to me that it is unlikely that bulls will actively defend this area, so its breakdown with a reverse test from below will form an additional sell signal and increase pressure, opening the road to 1.2990. A breakthrough in this area will also lead to the demolition of another series of buyers' stop orders and a sell signal further along with the trend to the area of lows 1.2950 and 1.2911, where I recommend fixing the profits. If the pair grows during the American session and sellers are weak at 1.3071, sellers of the pound may have problems. In this case, I advise you to postpone sales until 1.3104. 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 1.3104, or even higher - from 1.3133, counting on the pair's rebound down by 30-35 points within a day.
The COT reports (Commitment of Traders) for March 29 recorded an increase in short positions and a reduction in long ones. This all points to concerns about the state of the UK economy and the risks of high inflation, which is sure to further exacerbate the ongoing crisis of British households. Experts note that the situation will only worsen, as inflation risks, which mainly negatively affect the economy, are now quite difficult to assess. Against this background, the softer position of the governor of the Bank of England seems inappropriate, which does not allow buyers of risky assets to engage in a set of long positions on the pound in the expectation of a further increase in interest rates. The only thing the bulls can count on now is the positive results of the negotiations between the representatives of Russia and Ukraine and progress towards a settlement of the conflict. Do not forget about the aggressive policy of the Federal Reserve System, which continues to maintain demand for the US dollar due to the increased significant risks of economic recession in the second half of the year. The COT report for March 29 indicated that long non-commercial positions dropped from the level of 32,753 to the level of 30,624, while short non-commercial positions jumped from the level of 69,997 to the level of 70,694. This led to an increase in the negative value of the non-commercial net position from -37,244 to -40,070. The weekly closing price decreased to 1.3099 against 1.3169.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates a 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
In the case of a decline, the lower limit of the indicator around 1.3000 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 to 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.
