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

Considering that yesterday's focus was shifted to the European Central Bank meeting, the pound's growth slowed down in the afternoon, although the bulls were in complete control of the market. During the European session, I paid attention to several levels, where I advised making decisions on entering the market. Let's take a look at the 5 minute chart and break down the entry points. The breakout of 1.3719 took place at the very beginning of the day, but I did not wait for a reverse test of this level from top to bottom. For this reason, I was forced to miss the entry point into long positions. But nothing ended there: the formation of a false breakout in the resistance area of 1.3756 resulted in creating an excellent entry point to short positions, which quickly pushed the British pound to support 1.3719, making it possible to take 30 points from the market, which it missed at the beginning of the day.

During the US session, the bulls managed to settle above 1.3756 and after the bears failed to take the market under their control, a signal to buy the pound was formed there. Growth from the entry point reached 30 points, but we did not reach the target level of 1.3791.

Today we are waiting for a fairly large number of fundamental reports for the UK. In addition to activity indices in the manufacturing and service sectors, attention will be drawn to indicators on changes in the volume of retail trade and consumer confidence from GfK. Good data is likely to bring back those who want to buy the pound even at such prices into the market, which will lead to a breakthrough of weekly highs and resume the bullish trend. Now the bulls are focused on the resistance at 1.3783. Only a breakthrough and consolidation at this level with its reverse test from top to bottom will push the pound to new highs of 1.3819 and 1.3859. The next target will be resistance 1.3896, where I recommend taking profits. Bulls are not particularly threatened in case the pair falls against the background of weak fundamental indicators. Attention will shift to support 1.3742, slightly below which the moving averages play on their side. Forming a false breakout there will be a signal to open new long positions in continuation of the upward trend. If the bulls are not active in the 1.3742 area, it is best to postpone long positions until the 1.3707 low is renewed, but even there one can count on buying only if a false breakout is formed. I recommend buying GBP/USD immediately on a rebound only from a low like 1.3674, or even lower - around 1.3636, counting on an upward correction of 25-30 points within the day.

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

The initial challenge for the bears is to defend resistance at 1.3783, which is likely to be tested following the release of UK retail trade data. Forming a false breakthrough there with a weak increase in short positions will return pressure to the pound and generate the first signal to open short positions in hopes that the pair would fall to the support area of 1.3742, where the moving averages that play on the bull's side pass. Only a breakthrough of this range and a test from the bottom up can hit the bulls' stop orders, which will push the pound to the next support at 1.3707, where I recommend taking profits. The 1.3674 level is still the next target. If the bears are not active in the 1.3783 area and we receive good indicators of the consumer confidence indicator in the UK, I recommend postponing short positions until the next major resistance at 1.3819, or selling GBP/USD immediately after a rebound from 1.3859, counting on a downward correction of 25-30 points within the day.

The Commitment of Traders (COT) report for July 13 recorded a sharp decline in long positions and a slight increase in short ones. This suggests that US inflation has influenced the sentiment of the bulls in a negative direction. The fact that representatives of the Bank of England have recently been reluctant to talk about plans to cut the bond purchase program once again proves their cautious stance on this issue. The UK government completely canceled all quarantine restrictions on July 19 this year, but according to the latest figures on the incidence in the country of the new Delta coronavirus strain, this won't take long. Undoubtedly, after each major downward movement of GBP/USD, traders show particular interest, as sooner or later the central bank will talk about curtailing support measures for the economy, which will have a positive impact on the British pound and lead to its growth. But as long as it does not severely stray away from the UK inflation target, then the Bank of England is unlikely to rush to make changes to its policy. Despite this, the best scenario is to buy the pound for every good decline against the US dollar. The COT report indicated that long non-commercial positions declined from 57,232 to 44,686, while short non-commercial positions rose from 35,329 to 36,717. As a result, the non-commercial net position decreased to 7,969 from 21,903 The closing price of the last week increased slightly and amounted to 1.3886 against 1.3853.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bulls to continue the upward trend.

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 1.3780 will lead to a new wave of growth of the pound. A breakthrough of the lower border of the indicator around 1.3745 will increase the pressure on the pair.

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.