Yesterday, many entry signals were made. Let's take a look at the M5 chart and see what happened. In my morning forecast, we considered entering the market from the level of 1.2433. Growth and a false breakout at 1.2433 generated a sell signal. A breakout and a retest of this range generated a buy signal. The pair rose by over 20 pips. In the North American session, the price fell to 1.2433. Its retest produced a signal to sell, bringing a profit of some 20 pips more.
When to open long positions on GBP/USD:
Today, no macro releases are scheduled in the UK. However, Bank of England Governor Andrew Bailey will give a speech. It remains to be seen whether traders find his remarks interesting. In any case, the buyers are likely to buy out the instrument if the pair goes down to offset the previous downward movement ahead of US inflation. The level of 1.2419 is in focus, and the price is heading to it right now. A decline and a false breakout there will indicate bullish sentiment in the market. A signal to buy, targeting 1.2454, will be made. A break and a downside test of this area will produce another buy entry point with the target at a high of 1.2487, where I am going to take profits. The farthest target is seen in the area of 1.2522, but the price will head towards it only if US inflation comes weak. In case of a decline to the area of 1.2419 and no bullish activity there, we may buy only after a false breakout through support at 1.2383. We may also buy GBP/USD on a rebound from this week's low of 1.2344, allowing a correction of 30-35 points intraday.
When to open short positions on GBP/USD:
After a false breakout through 1.2454, a correction may follow. The price may return to 1.2419, in line with the bullish MAs. A breakout and a downside retest of this range will exert pressure on the pound and generate a sell signal, targeting 1.2383. However, quotes will unlikely go there before the release of US inflation data. The most distant target stands at a low of 1.2344. However, the price will hardly test this barrier today. If there is growth and no trading activity at 1.2454, we may sell after a test of the 1.2487 high. A false breakout there will create a sell entry point. If no decline follows, we may sell GBP/USD from the 1.2522 high, allowing a correction of 30-35 pips intraday.
Commitments of Traders:
The COT report for April 4 logged an increase in both long and short positions. However, this did not significantly affect the downside correction of the pair, which, judging by the chart, is gradually coming to an end. This week, new data on UK GDP is expected, which may be enough for the buyers to maintain control over the market and return to monthly highs. No statements from Bank of England representatives are expected. The market's reaction to US inflation and retail sales statistics is also very important. These figures may trigger a rally in the US dollar. The latest COT report states that short non-commercial positions increased by 8,769 to 61,109, while long non-commercial positions jumped by 18,060 to 46,415. As a result, non-commercial net positions came in at -14,793 versus -24,084 a week earlier. The weekly closing price rose to 1.2519 from 1.2241.
Indicator signals:
Moving averages
Trading takes place above the 30-day and 50-day moving averages, which indicates a bullish market.
Note: The period and prices of moving averages are viewed by the author on the hourly chart and differ from the general definition of classic daily moving averages on the daily chart.
Bollinger Bands
Support stands around 1.2410, in line with the lower band.
Description of indicators
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 50. Colored yellow on the chart.
- Moving average (MA) determines the current trend by smoothing volatility and noise. Period 30. Colored green on the chart.
- Moving Average Convergence/Divergence (MACD). Fast EMA 12. Slow EMA 26. SMA 9.
- Bollinger Bands. Period 20
- Non-commercial traders are speculators such as individual traders, hedge funds, and large institutions who use the futures market for speculative purposes and meet certain requirements.
- Long non-commercial positions are the total long position of non-commercial traders.
- Non-commercial short positions are the total short position of non-commercial traders.
- Total non-commercial net position is the difference between the short and long positions of non-commercial traders.
