To initiate long positions on GBP/USD, the following conditions are necessary:
The UK GDP data supported demand for the British pound, keeping it above the weekly lows. However, several reports scheduled for the day's second half could put pressure on the currency pair. Of particular interest are the figures related to the main personal consumption expenditures index and changes in US personal spending and income levels. The Chicago PMI index and the University of Michigan consumer sentiment index data will also be significant.
The level of 1.2600, established during the European session, is acting as significant support. If a false breakout at this level follows another decline, it will present an excellent opportunity to continue the upward trend and aim for 1.2662. A breakout and subsequent retest of this range from above to below would invalidate the bearish efforts from the previous day and provide an additional signal to open long positions with a target of 1.2710. The ultimate target would be the area around 1.2755, where I intend to take a profit. However, if the scenario involves a decline towards 1.2600 with a lack of buying activity, considering that this area has already been tested twice in a short period, it would increase pressure on the pound as there would be no further reasons to buy it. In such a case, only the defense of the 1.2557 area, along with a false breakout, would indicate a signal to open long positions. I plan to buy GBP/USD only on a rebound from 1.2515, targeting a correction of 30-35 points intraday.
To initiate short positions on GBP/USD, the following conditions are required:
Although sellers showed some activity, more was needed. It is crucial to gain control of 1.2600 as quickly as possible. If the price returns below this level and retests from below to above, it would signal to sell with a downward move towards 1.2557. A breakout and subsequent retest of this range would have a more significant impact on buyer positions, pushing GBP/USD towards 1.2515, indicating the formation of a bearish market for the pound. The ultimate target remains at a minimum of 1.2479, where I would take profit. However, if GBP/USD rises and there is a lack of activity at 1.2662 in the second half of the day, the attempt at a downward correction would likely end, and the bulls would regain control of the market. In such a scenario, I would delay selling until the resistance at 1.2710 is tested. A false breakout at that level would provide an entry point for short positions. If there is no downward movement, I will open short positions on GBP/USD immediately after a rebound at 1.2755, but only with the expectation of a 30-35 point correction intraday.
The COT (Commitment of Traders) report for June 13 showed a significant increase in both long and short positions. The pound has recently experienced a substantial rise, attracting sellers' attention. However, the Bank of England's aggressive policy and the latest inflation data in the UK are attracting new buyers to the market, anticipating further interest rate hikes. The attractiveness of the British pound remains strong due to the Bank of England not yet considering a pause in its tightening cycle, while the Federal Reserve has already halted its own. The latest COT report shows that non-commercial short positions increased by 17,069 to 69,648, while non-commercial long positions surged by 11,320 to 76,383. As a result, the non-commercial net position slightly decreased to 6,736 compared to 12,454 in the previous week. The weekly price rose and reached 1.2605, up from 1.2434.
Indicator signals:
Moving Averages
Trading is taking place just below the 30-day and 50-day moving averages, indicating further decline in the pair.
Note: The period and prices of the moving averages discussed by the author are based on the H1 hourly chart and differ from the general definition of classical daily moving averages on the D1 daily chart.
Bollinger Bands
In the case of a decrease, the lower boundary of the indicator, around 1.2600, will act as support.
Description of Indicators:
• Moving average (determines the current trend by smoothing volatility and noise). Period - 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing volatility and noise). Period - 30. Marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence - measures the convergence or divergence of moving averages). Fast EMA - period 12. Slow EMA - period 26. SMA - period 9.
• Bollinger Bands. Period - 20.
• Non-commercial traders - speculators such as individual traders, hedge funds, and large institutions using the futures market for speculative purposes and meeting specific requirements.
• Long non-commercial positions represent the total long open positions of non-commercial traders.
• Short non-commercial positions represent the total short open positions of non-commercial traders.
• The net non-commercial position is the difference between non-commercial traders' short and long positions.
