In my morning forecast, I paid attention to the 1.1833 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. An unsuccessful attempt by the bulls to continue the pair's growth in the first half of the day resulted in a false breakdown in the area of 1.1833 and a sell signal for the pound, which at the time of writing had already sunk by more than 50 points. Because of this, we had to revise the technical picture of the pair and the strategy itself.
To open long positions on GBP/USD, you need:
During the American session, data on the change in the volume of orders for long-term goods, as well as data on the change in the volume of pending transactions for the sale of housing, are released. The negative nature of the indicators can lead to a sharp upward jerk of the pound, while quite satisfactory statistics will put additional pressure on the pair. In the case of further decline after strong data, only the formation of a false breakdown near the new level of 1.1750 forms a buy signal to restore to the area of 1.1801. At 1.1750, the lower boundary of the new ascending price channel passes, so I expect that the bulls will be most active there. A breakdown and a reverse test from top to bottom of 1.1801, where the moving averages are held, will help to cancel out the bears' attempts to continue the trend and strengthen buyers, opening the way to 1.1847. A more distant goal will be a maximum of 1.1895, where I recommend fixing the profits. If GBP/USD falls and there are no buyers at 1.1750, things will go from bad to worse, and the downward trend will intensify. In this case, I advise you not to rush shopping. Only a false breakdown near the annual minimum of 1.1718 will give a new signal to open long positions. You can buy GBP/USD immediately for a rebound from 1.1684, or even lower – around 1.1643, with the aim of a correction of 30–35 points within a day.
To open short positions on GBP/USD, you need:
In the afternoon, fundamental statistics in the US should help the dollar, which will allow the bears to protect the critical level of 1.1801 formed during the European session. A false breakout at 1.1801 will provide sellers of the pound with new strength, strengthening the bear market and allowing them to count on a downward movement to the 1.1750 area. A breakthrough and a reverse test from the bottom up of 1.1750 will give an entry point for sale with the prospect of reaching 1.1718, from which it is very close to a new annual minimum of 1.1684. The farthest target will be the 1.1643 area, where I recommend fixing the profits. With the option of GBP/USD growth and the absence of bears at 1.1801, bulls will have a real chance to correct and build a sharper upward price channel with a lower bound from 1.1718. In this case, I advise you not to rush with sales: only a false breakdown in the area of 1.1847 will give an entry point to short positions in the expectation of a rebound of the pair. I advise you to open short positions immediately for a rebound based on the pair's movement down by 30-35 points inside the day from the resistance of 1.1895.
The COT (Commitment of Traders) for August 16 recorded an increase in both short and long positions, but these changes no longer reflect the current picture. Serious pressure on the pair, which began in the middle of last week, continues now. There will be fewer and fewer people willing to buy the pound in difficult macroeconomic conditions. We have a meeting of American bankers in Jackson Hole ahead of us, which may lead to an even greater strengthening of the dollar against the pound. This will happen if the Chairman of the Federal Reserve System, Jerome Powell, announces the preservation of the previous position of the committee regarding an active and tough increase in interest rates in the hope of further combating inflation and bringing it back to normal. The latest COT report indicates that long non-commercial positions increased by 1,865 to 44,084. In contrast, short non–commercial positions increased by 506 to the level of 77,193, which led to an even greater reduction in the negative value of the non–commercial net position to the level of - 33,109 versus -34,468. The weekly closing price remained almost unchanged and amounted to 1.2096 against 1.2078.
Signals of indicators:
Moving Averages
Trading is conducted below the 30 and 50-day moving averages, which indicates a further fall of the pair.
Note. The author considers the period and prices of moving averages 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 growth, the upper limit of the indicator, around 1.1847, 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.
