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

Quite a lot of signals to enter the market were formed yesterday. Let's take a look at the 5-minute chart and talk about what happened. In my morning forecast, I paid attention to the 1.3837 level and recommended making decisions on entering the market from it. You can clearly see how the pair is going down to the 1.3837 area, but before the test of this range, literally one point was not enough to wait for a false breakout to form there. If you missed this signal, then you did the right thing. Otherwise, those who entered long positions could wait for the resistance test at 1.3871, where the entire bullish initiative ended. Forming a false breakout at this level in the second half of the day resulted in creating the first signal to open short positions. Some time later, another unsuccessful test of the 1.3871 area confirmed the correct decision to sell the pound, which led to a large sale and the return of the trading instrument under the support of 1.3837.

Before examining the technical picture of the pound, let's take a look at what happened in the futures market. The Commitment of Traders (COT) reports for August 10 showed that short positions have been reduced, while long ones sharply rose. All this is explained by the results of the Bank of England meeting, where representatives once again mentioned that in the near future the attitude to monetary policy will change towards tightening. Also, additional pressure on the pound was exerted by the US inflation report, which disappointed investors and coincided with the forecasts of economists. This suggests that the Federal Reserve will clearly not rush to make changes in its monetary policy, especially against the backdrop of the emergence of another problem - supply chain disruptions in the South Asian region. All this can seriously affect pricing, as well as the economic recovery of a number of countries, including the UK. However, as before, I advise you to stick to the strategy of buying the pound with every significant decline, as the big players do. The COT report indicated that long non-commercial positions rose from 43,119 to 44,750, while short non-commercial positions fell from 43,205 to 37,680, indicating continued buying from major players. As a result, the non-commercial net position returned to the positive side and reached 7070, against -86 a week earlier. Last week's closing price dropped from 1.3891 to 1.3846.

Today we are expecting quite interesting data on the unemployment rate in the UK, as well as on the change in the number of applications for unemployment benefits. Despite the importance of these reports, while the programs to support the government of the country of the labor market are in effect until September of this year, this indicator should not be paid serious attention. It is not reliable and it is far from clear how many people live on benefits and additional payments, and how many are actually on labor leave due to the coronavirus pandemic. But if the reading improves, hope for a recovery in the British pound after today's big Asian selloff is sure to emerge. In the meantime, the bulls need to think about how to protect the new support at 1.3800, to which the pair is gradually declining. Only the formation of a false breakout there will lead to a signal to open long positions as opposed to the downward trend in hopes that the pair would recover to the resistance of 1.3830, which was formed this morning. Only a breakthrough and reverse test of this level from top to bottom can generate another buy signal, which will push the pound even higher - to the 1.3825 area, where the moving averages, playing on the side of the bears, pass. The next target will still be the resistance at 1.3876, where I recommend taking profits. If the pressure on the pair returns in the morning, do not rush to buy around 1.3800. The optimal scenario will be long positions from the next support at 1.3773, but only if a false breakout is formed. I advise you to watch buying GBP/USD immediately for a rebound only from a low like 1.3742, counting on an upward correction of 25-30 points within the day.

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

So far, the bears are coping with the tasks assigned to them. Weak reports on the UK labor market will surely confuse traders hoping for a recovery in the pair after Friday's sharp increase. The top priority for the bears is to control the new support level at 1.3800. A breakthrough of this area and its reverse test from the bottom up will generate a signal to open short positions in hopes of a decline to the level of 1.3773. A breakthrough of this range with a similar scenario will form another entry point to short positions in hopes of breaking the stop orders of the bulls and a larger fall to the area of the low of 1.3742, where I recommend taking profits. If the pound grows in the first half of the day, only the formation of a false breakout in the resistance area of 1.3830 will be a signal to sell GBP/USD. I advise you to open short positions in the pound immediately on a rebound from a larger resistance at 1.3852, or even higher - from a high of 1.3876, counting on the pair's rebound down by 20-25 points within the day.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates a decline in the pair in the short term.

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

In case of growth, the upper border of the indicator at 1.3870 will act as a resistance. A breakout of the lower boundary at 1.3812 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.