Yesterday, several interesting signals were formed to enter the market. Let's look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the level of 1.2514 and 1.2549. The lack of statistics and the breakthrough of 1.2514 allowed us to count on the formation of a buy signal for the pound, which did not have to wait very long. The reverse top-down test of 1.2514 gave an excellent signal to open long positions, which led to an increase in the pair by more than 60 points. A similar consolidation and a top-down test of 1.2549 is also a buy signal. However, I did not wait for large growth. At the time of writing, the price has returned to 1.2549, which knocked the deal to zero. In the afternoon, I waited for a correction and a false breakdown at 1.2534, which allowed me to enter long positions in the expectation of continued growth of the pound, but after moving up by about 15 points, the pressure on the pair began to return, which knocked the deal to "zero". There were no other entry points. And what were the entry points for the euro?
To open long positions on GBP/USD, you need:Today, the pound has already fallen to the lows of last week and it seems that it is not going to stop there. Boris Johnson's victory puts serious pressure on the national currency and traders do not see prospects in the near future. Poor data on the composite UK PMI index and the index of business activity in the services sector may lead to even more pressure on the pair, which will create an opportunity to break the lows. Only the formation of a false breakdown at 1.2460 and a good report will lead to the first signal to open new long positions in the expectation of a resumption of the bullish trend. An equally important task for the bulls will be to bring the resistance of 1.2497 back under control. Only this will reduce the pressure on the pair and allow it to get out to 1.2534. The 1.2534 test from top to bottom will be a good buy signal based on the 1.2575 update, where I recommend fixing the profits. If the pound declines and there are no buyers at 1.2460, the pressure on the pair will only increase. This will completely reverse the uptrend for the pair and will open the way to 1.2411. For this reason, I advise you not to rush purchasing. It is best to enter the market after a false breakdown at this level. You can buy GBP/USD immediately from 1.2371, or even lower - around 1.2331 with the aim of correction of 30-35 points within a day.To open short positions on GBP/USD, you need:The bears took advantage of the moment and the shake-up in the political arena and, together with expectations of an aggressive policy on the part of the Federal Reserve System, pulled the pound further down in the hope of breaking the lows of last week. All they need now is the protection of the nearest resistance of 1.2497. Only the formation of a false breakdown there, together with weak data on the slowdown in the growth of activity in the service sector, will give a signal to open short positions in the expectation of building a new downward trend, which will happen after the breakthrough of 1.2460. Fixing below 1.2460 and a reverse test from the bottom up of this range will form an additional sell signal, allowing you to dump GBP/USD in the area of 1.2411, from which there is a direct road to 1.2371, where I recommend fixing the profits. The longer-range target will be a minimum of 1.2331, which will completely cancel out the bull market. With the option of GBP/USD growth and lack of activity at 1.2497, an upward jerk may occur against the background of the demolition of sellers' stop orders. In this case, I advise you to postpone short positions until 1.2534. I advise you to sell the pound there only if there is a false breakdown. Short positions immediately on the rebound can be made from 1.2575, or even higher – from 1.2618, counting on the pair's rebound down by 30-35 points inside the day.The COT report (Commitment of Traders) for May 24 recorded a reduction in long positions and an increase in short ones. However, this did not significantly affect the balance of power. Despite the growth of the pound since the middle of this month, the market remains completely under the control of sellers. Only the lack of fundamental statistics, to which the pair have been reacting quite negatively lately, and small profit-taking from annual lows allowed GBP/USD to recover a little. There are no other objective reasons for growth. The economy continues to slide into recession, inflation is breaking new records, and the cost of living in the UK is steadily rising. The Bank of England continues to rush between two fires, but even despite all this, the governor of the Bank of England, Andrew Bailey, continues to say that the regulator is not going to give up on raising interest rates yet. Rumors spread that the US central bank plans to "pause" the cycle of interest rate hikes in September of this year continue to gain momentum, which puts little pressure on the US dollar and leads to a strengthening of the pound. The COT report for May 24 indicated that long non-commercial positions decreased by -667 to the level of 25,936, while short non-commercial positions increased by 454 to the level of 106,308. This led to an increase in the negative value of the non-commercial net position from the level of -79,241 to the level of -80,372. The weekly closing price rose from 1.2481 to 1.2511.Signals of indicators:Moving AveragesTrading is conducted below 30 and 50 daily moving averages, which indicates an attempt by bears to seize the initiative.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 BandsIn the case of a decline, the lower limit of the indicator around 1.2460 will act as support. In case of growth, the 1.2575 area 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 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.
