To open long positions on GBP/USD, you need:
As in the first half of the day yesterday, several signals were formed to enter the market. The scenario was exactly the same. Let's take a look at the 5-minute chart and talk about what happened: the first sell signal appeared after the pair surpassed and settled below support at 1.3863. I indicated this point in my forecast. A reverse test of this level from the bottom up (which I highlighted on the chart) created a signal to open short positions, but the downward movement did not occur again and the pair quickly returned to the level of 1.3863, which brought losses. A little later, a signal to buy the pound appeared. It can be clearly seen how the reverse test of the level 1.3863 from top to bottom resulted in creating a new signal to open long positions, which was fully implemented in today's Asian session, as the target resistance at 1.3917 was updated. This brought about 55 points of profit, making it possible to offset yesterday's losses and make money.
Despite the rather good volatility of the pound, the technical picture of the pair hasn't changed much. In the first half of the day, it is important for the bulls to surpass the 1.3917 range. Consolidating above and a test of this level from top to bottom will be a signal to open new long positions in hopes of continuing the upward April trend and a return to a rather important resistance at 1.3970, where I recommend taking profits. The next target will be the 1.4016 high, the renewal of which will resume the bullish trend, allowing the pound to move beyond the wide horizontal channel, in which it has been since the end of April. In case GBP/USD falls, bulls will have to defend support at 1.3863. You can act from there only after forming a false breakout. If GBP/USD is not active at the 1.3863 low, then I recommend refraining from long positions immediately to a rebound from the local support in the 1.3811 area, from where you can expect an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears currently need to think of a way to protect resistance at 1.3917, which the bulls have come close to today. Forming a false breakout there creates a signal to open short positions in hopes that the quote would fall to support at 1.3863, around which a lot of interesting things happened yesterday. If the bears are not active at this level, and the absence of important fundamental statistics may contribute to this, then I recommend refraining from short positions until the upper border of the horizontal channel at 1.3970 has been updated, from where you can open short positions immediately on a rebound in the expectation of a downward correction of 20-25 points within the day... An equally important task for the bears is support at 1.3863, which they failed to surpass yesterday. Only a breakthrough and consolidation below this level with a reverse test from the bottom up (by analogy with the sale that I mentioned above) can create a good entry point to short positions in hopes of returning to the 1.3811 area, where I recommend taking profit. The next target will be the level 1.3755, but it will be quite difficult to reach it.
The Commitment of Traders (COT) report for April 27 revealed that both long and short positions have decreased, while the total non-commercial net position increased. How it happened - let's figure it out. Last week, we did not see any important fundamental statistics from the UK, so everyone was focused on the European Parliament vote on Brexit, the results of which supported the pound. Also, the speeches of the British Prime Minister and the possible earlier lifting of all quarantine restrictions in Britain enabled the bulls to adhere to their scenario to strengthen the pair. All this will contribute to growth in the medium term, so I recommend betting that the pound would strengthen further against the US dollar. Any good downward correction is another reason to think about buying the pound, since the prospect of a recovery in the UK economy in the summer gives rise to a lot of optimism. The COT report revealed that long non-commercial positions declined from 61,053 to 59,917. At the same time, short non-commercials fell from 35,875 to 30,699, causing the non-commercial net position to rise to 29,218 against 25,178 a week earlier. Closing short positions once again points to the fact that the pound has a huge potential to grow. Last week's closing price also slightly dropped to 1.38947 against 1.39915.
Indicator signals:
Trading is carried out just above the 30 and 50 moving averages, which indicates an attempt by the bulls to get out of the horizontal channel.
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
Surpassing the upper border of the indicator in the area of 1.3917 may lead to a new wave of growth for the pound. Support will be provided by the lower border around 1.3850.
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.
