To open long positions on GBP/USD, you need to:

Bears are not very active in the market yet, which only confirms a strong bullish trend, against which few people want to climb. In the first half of the day, a signal was formed to open short positions on the pound. However, it has not come to its implementation. In my morning forecast, I paid attention to the level of 1.4201 and the data on the UK labor market. Given that the report was better than the forecasts of economists, there was a well-expected growth of the pound in the resistance area of 1.4201. In the first half of the day, a false breakout was formed, which led to the formation of a sell signal. At the time of writing, the bulls have taken this level and are trading above this range, which seriously threatens the implementation of the bearish scenario in the afternoon. The pound's growth will most likely continue further along with the trend, so be very careful with sales, as now is the time to get out of them completely with minimal losses. Those who believe in a reversal and a downward movement of the pound remain in the market, but I do not see any prerequisites for this.

Buyers need to protect the support of 1.4201, where the formation of a false breakout will lead to the formation of an entry point into long positions in the continuation of the upward trend of the pair already in the area of a new high of 1.4257, where I recommend taking the profits. The next target will be the area of 1.4301. If the bears manage to control the level of 1.4201, the pound will likely correct down in the second half of the day. In this scenario, you can count on buying on the rebound from the large support of 1.4139, where the moving averages are also playing on the bulls' side. With no buyer activity in this area, the focus will shift to the fundamental data on the US economy. Strong reports may force buyers to take profits, which will push the pound even lower to the support of 1.4078, which can be used to buy the pair immediately for a rebound in the expectation of a correction of 20-25 points within the day.

To open short positions on GBP/USD, you need to:

The main task of sellers is to return the 1.4201 support under control. But only its reverse test from the bottom up will lead to the formation of a signal to open short positions in the expectation of a small downward correction to the support area of 1.4139, where the moving averages that limit the downward potential of the pair pass. If, after the pair falls below 1.4201, there is no special activity on the part of sellers, and the bulls regain control of this level again in the second half of the day, I recommend that you postpone short positions until the next monthly high is updated in the area of 1.4257. The formation of a false breakout will be a signal to sell the pound. It is now possible to open short positions immediately for a rebound against the trend only in the area of 1.4310 to a downward correction of 15-20 points within the day.

Let me remind you that the COT reports (Commitment of Traders) for May 11 recorded an increase in both long and short positions. All this happened against the background of a small downward correction of the pair, which was completely recouped after good indicators on the UK economy's contraction rate in the 1st quarter of this year. The growth last month also gave investors hope that the British pound will continue to gain strength. As early as early summer, almost all quarantine restrictions will be lifted in the UK. Given the excellent rate of vaccination against coronavirus, we can assume a sharp recovery in GDP in the 2nd quarter of 2021, which will be the highest in the history of this indicator. Such news strengthens investors' confidence in the British pound and its prospects. The COT report shows that long non-profit positions have grown from 52,262 to the level of 64,947. At the same time, short non-profit positions rose from 32,414 to 36,771, bringing the non-profit net position to 28,176 from 19,848 a week earlier. Last week's closing price also jumped significantly to 1.41308, against 1.39033.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, indicating further growth of the pound on the trend.

Note: The period and prices of the 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 Bands

A break of the upper limit of the indicator in the area of 1.4201 will lead to a new wave of growth of the pound. If the pair falls, the support will be provided by the average border of the indicator in the area of 1.4150.

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 that use the futures market for speculative purposes and meet specific 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.