To open long positions on GBP/USD, you need:
An excellent signal for opening short positions appeared yesterday after the US inflation report was released. Let's take a look at the 5-minute chart and talk about what happened. The bears tried to surpass 1.3855 in the first half of the day, but then the bulls gained control over this level - sort of like making a false break. But after 10 minutes, the price fell below 1.3855, which negates all plans for a quick entry into long positions. Considering that I was forced to skip the morning rally, the emphasis was shifted to resistance 1.3919, from which the actions were more successful. You could see how sellers formed a false breakout at this level, returning the pair to the area below it, and then testing it from the bottom up: this creates an excellent entry point into short positions, as a result of which the pair falls by almost 40 points.
At the end of the US and today's Asian session, the bulls still managed to settle above the 1.3919 level, and now the whole emphasis in the first half of the day will be placed on it. Important fundamental statistics on the UK will not be released today, so you can focus on the eurozone and the US economy. Forming a false breakout in the support area of 1.3919 creates a new entry point for opening long positions in order to continue the upward correction for the pair. The nearest target will be resistance at 1.3995, where I recommend taking profits. The succeeding target is still the high at 1.4062. In case the pound falls in the first half of the day and trade is not active in the 1.3919 area, then you can safely open long positions immediately on a rebound from the large support at 1.3848, where the lower border of the current rising channel passes. If buyers are not active in the 1.3848 area, then I recommend postponing long positions until the 1.3783 low has been tested, counting on a rebound of 30-35 points within the day.
To open short positions on GBP/USD, you need:
The initial task is to bring back the lost level of 1.3919. Being able to test it from the bottom up will return new sellers to the market, expecting a renewed decline in GBP/USD, and the breakdown of the moving averages will lead to a larger sale of the pound and push it to return to a low like 1.3848. An equally important goal is a breakthrough and test this level from the bottom up, which creates an additional entry point into short positions for the purpose of returning to support at 1.3783, where I recommend taking profits. In case the pound grows further in the first half of the day, then it is best not to rush to sell: you can open short positions immediately on a rebound from the 1.3995 high counting on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.4062.
The Commitment of Traders (COT) report for March 2 reduction in both short and long commercial positions. Closing short positions turned out to be stronger, which led to an increase in the positive delta. And although the growth in the yield of US bonds is providing serious support to the US dollar at the moment, in the medium term, bulls can only use the pair's correction in order to enter the market at more attractive prices. The anticipation of a quarantine rollback in March this year will support the pound, so will new measures to help the UK population in the fight against the coronavirus pandemic, recently announced by Treasury Secretary Rishi Sunak. Long non-commercial positions declined from 68,266 to 65,138. At the same time, short non-commercials fell from 37,288 to 29,056, which retains good prospects for the pound's succeeding growth. As a result, the non-commercial net position rose to 36,082 from 30,978 a week earlier. The weekly closing price was 13,928 against 14,067. The downward correction in the pound will attract new buyers.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates an attempt by buyers to continue the upward correction for the pair.
Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.
Bollinger Bands
A breakout of the upper border of the indicator in the 1.3945 area will push the British pound to rise. In case the pair falls, support will be provided by the lower border of the indicator in the 1.3870 area.
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.
