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

Several signals to enter the market were formed yesterday. Let's take a look at the 5-minute chart and analyze the entry points.

In my morning forecast, I advised you to pay attention to the level of 1.4149 and make a decision from it. Forming a false breakout there at the beginning of the European session resulted in creating a signal to open long positions, and after a while, after a very good report on activity in the UK services sector, the pound managed to quickly recover to the resistance area of 1.4188, which brought about 40 points of profit.

The afternoon was no less interesting. Failure to settle above the resistance of 1.4188 and a return to the area under this level, followed by a test of it from the bottom up, all this created an excellent signal to open short positions with 1.4149 as the first target (+40 points) and subsequent exits to the low of 1.4112, which brought more than 70 points of profit. It was not possible to add to short positions after a breakthrough of 1.4149, as the reverse test of this level from the bottom up did not take place. Long positions on the rebound from the level of 1.4112 also did not bring much result, since bulls were not active there.

Today there is no important data for the UK, so the entire focus of the market will shift to the US labor market report. The strong growth in the number of employees will lead to further strengthening of the US dollar and weaken the pound's position. The initial task during the European session is to protect support at 1.4077, which the bears are now aiming for. Forming a false breakout there will be the first signal to open long positions in hopes of stopping the downward trend observed since the middle of this week. If the bulls are not active there, it is best to postpone long positions until the renewal of the 1.4041 low, where it is also necessary to wait for a false breakout. You can buy the pair immediately on a rebound around 1.4008 while aiming for a small upward correction of 15-20 points within the day. An equally important task for the bulls is to regain control of the resistance at 1.4115. Only a consolidation at this level with its subsequent test from top to bottom can create a signal to open long positions with an exit to a high like 1.4152, where I recommend taking profits. Below this level, there are moving averages that play on the side of the bears. The next target is the resistance at 1.4188.

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

The primary task for the bears is to go beyond and test the 1.4077 area from the bottom up, which creates the entry point for short positions in hopes of continuing the bear market that was observed yesterday. Such a scenario should plunge GBP/USD in the area of a low like 1.4041, where I recommend taking profits. We can count on a test of further support at 1.4008 only in case we receive excellent indicators on the US labor market and a decrease in the unemployment rate. It is possible to say that the bulls stopped the downward trend only after they have regained control of the resistance at 1.4115. Therefore, the bears must protect the 1.4114 range. Forming a false breakout there will be a signal to open short positions in continuation of the downward trend. In case the pound grows in the first half of the day and the bears are not active in the 1.4115 area, it is best not to rush to sell: I advise you to postpone short positions until an update to the 1.4152 high, from which you can sell the pound immediately on a rebound, counting on a downward correction of 20-25 points inside day.

The Commitment of Traders (COT) reports for May 25 showed that short positions decreased while long ones increased. Recent statements by representatives of the Bank of England that now is the time to think about curtailing support measures and raising interest rates surprised many traders, but this returned the demand for the British pound, and due to this, it managed to pull up the currency to annual highs. The pound was also supported by the news that from June 21 this year, the UK economy will be fully open and all restrictive measures due to Covid will be canceled. This will be a good bullish boost for retail sales and inflation. The upward potential of the pound will remain quite high amid this background, you just need to wait a little. The COT report indicates that long non-commercial positions increased from 63,027 to 64,193, but short non-commercial positions sharply decreased from 38,127 to 33,534, which indicates profit-taking and the bears leaving the market, after unsuccessful attempts to turn the market to their side. This is another advantage for the bulls and those who believe in the continuation of the medium-term upward trend. As a result, the non-commercial net position increased from 24,900 to 30,659. The closing price of last week did not change significantly and reached 1.41553 against 1.41479.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates a continuation of the bear market.

Moving averages

Note: The period and prices of moving averages are considered by the author on the H1 hourly chart and differs from the general definition of the classic daily moving averages on the daily D1 chart.

Bollinger Bands

If the pound rises, the upper border of the indicator in the area of 1.4150 will act as a resistance. The lower border of the indicator around 1.4050 can be used as support.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, 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.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.