In my morning forecast, I drew attention to the 1.2680 level and recommended using it to decide about entering the market. Let's look at the 5-minute chart and understand what happened there. The pound fell in the first half of the day, but a few points were missing to test 1.2680, so getting an entry point into long positions from there was impossible.
For opening long positions on GBP/USD, it is required:
The absence of statistics in the first half of the day and Independence Day in the US did their job. A similar story with low volatility and dismal trading volume will likely occur during the American session, so I decided to keep the strategy the same for the second half of the day. For purchases, I will prefer to act on a decrease and the formation of a false breakout in the area of the nearest support of 1.2680, which will provide not an excellent but an entry point with the target of recovery and renewal of resistance 1.2720, which has been unable to break out of lately. A breakout and top-down test of this range will form an additional buy signal that will return strength to the pound and lead to a renewal of 1.2755. With this level, it will be easier for GBP/USD buyers to count on further growth. If the level is exceeded, we can discuss a surge to 1.2796, where I will fix the profit.
In case of a GBP/USD fall and the absence of buyers at 1.2680, where the moving averages are also passing, the pressure on the pound will increase. If this happens, I will delay long positions to 1.2639. Purchases there will only be on a false breakout. You can immediately open long positions on GBP/USD on a rebound from 1.2592 with the goal of a 30-35 point correction within the day.
For opening short positions on GBP/USD, it is required:
Considering that there are not enough sellers to test 1.2680, there is no need to dream about a major pound fall in the second half of the day. Sellers also need to prevent the pair from exiting the upper boundary of the lateral channel and the nearest resistance at 1.2720. Only forming a false breakout there will generate a sell signal with the expectation of further decline to the support of 1.2680, where I expect the emergence of some buyers. A breakthrough and a reverse test from the bottom up of 1.2680 will provide an entry point for selling to renew 1.2639. A further target will be the minimum of 1.2592, where I will fix the profit. In the event of a GBP/USD rise and a lack of bears at 1.2720 in the second half of the day, the situation may come under the control of buyers, but this is unlikely to guarantee a bull market due to the day off in the US. In such a case, only a false breakout in the next resistance area of 1.2755 will form an entry point into short positions with the expectation of the pound moving down. If there is no activity, I advise selling GBP/USD from 1.2796 with the expectation of a pair rebound down 30-35 points within the day.
In the COT report (Commitment of Traders) for June 27, there was a small decrease in short positions and the same minimal growth in long positions. Pound buyers have all the chances to continue acting more aggressively, as the Bank of England, despite all the pressure and problems in the economy, will continue to stick to a policy of high-interest rates due to serious problems with inflation affecting household living standards. The fact that the Federal Reserve paused the cycle of monetary policy tightening last month, and the Bank of England is not yet planning to do so, makes the British pound more attractive. The optimal strategy remains to buy the pair on a decline. The latest COT report states that short non-commercial positions grew by 2,815 to 104,382, while long non-commercial positions decreased by 2,571 to 52,388. This led to a slight growth in the non-commercial net position to 51,994 against 46,608 a week earlier. The weekly price decreased and amounted to 1.2735 against 1.2798.
Indicator signals:
Moving averages
Trading occurs around the 30- and 50-day moving averages, indicating market equilibrium.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.
Bollinger Bands
In the case of a decrease, the lower border of the indicator, around 1.2680, will act as support.
Description of Indicators:
• Moving average (determines the current trend by smoothing out volatility and noise). Period 50. Marked in yellow on the chart.
• Moving average (determines the current trend by smoothing out volatility and noise). Period 30. Marked in green on the chart.
• MACD Indicator (Moving Average Convergence/Divergence - convergence/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, that use the futures market for speculative purposes and 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.
• The total non-commercial net position is the difference between non-commercial traders' short and long positions.
