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

In my morning forecast, I paid attention to the level of 1.3205 and 1.3173 and recommended making decisions on entering the market. Let's take a look at the 5-minute chart and figure out the entry point. Active protection of 1.3205 support by buyers in the first half of the day led to the formation of a good signal to buy the pound, however, contrary to all expectations, the pair failed lower, which led to the demolition of several stop orders and an instant drop of GBP/USD to the area of 1.3173. The formation of a false breakdown gave another entry point into long positions, which turned out to be more successful. At the time of writing, the growth was more than 30 points. From a technical point of view, only the nearest levels have changed, while the strategy has remained the same. And what were the entry points for the euro this morning?

The release of important fundamental data is not scheduled for the American session, so it is possible that after the breakout of 1.3205, buyers of the pound will have much more problems than before. Now it is very important to regain control of the 1.3205 resistance, as a lot depends on it now. Only a return to this level with a reverse test from top to bottom forms the first entry point into long positions based on the growth of the pound in the resistance area of 1.3239, just above which the moving averages playing on the sellers' side pass. A breakout and a test of 1.3239 will be an equally important task, since going beyond this range will allow the bulls to strengthen their positions to update the level of 1.3271, where I recommend taking profits. The longer-range target remains the resistance of 1.3301. In the scenario of a further decline in the pound during the US session and an unsuccessful attempt to return to 1.3205, buyers will have quite serious problems. It is best to focus on purchases when forming a false breakdown in the support area of 1.3173, by analogy with the morning deal that I analyzed above. It is possible to open long positions in GBP/USD immediately for a rebound at the minimum of 1.3111, or even lower - from 1.3070, counting on a correction of 20-25 points within a day.

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

The bears coped with their task perfectly and managed to fail another important support, reaching the lows of the month. Now their target is the 1.3173 level. Only a breakout and a reverse test from the bottom up of this range will give a good entry point to sell the pound with a promising further correction of the pair to 1.3111. The minimums will be a more distant target: 1.3070 and 1.3034, the update of which will indicate the resumption of the medium-term bearish trend for the pound. If the pair grows during the American session, the bears need to defend the resistance of 1.3205. Only the formation of a false breakdown there will lead to an excellent signal to open short positions. If there is no bull activity there, I recommend postponing sales to a larger resistance of 1.3239. I also advise you to open short positions there only in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound only from the maximum of 1.3271, or even higher - around 1.3301, counting on the pair's rebound down by 20-25 points inside the day.

In the COT reports (Commitment of Traders) for December 7, a reduction in both short and long positions was recorded. Given the almost equal reduction of positions, this did not lead to serious changes in the negative delta. Poor data on the UK economy, which came out at the end of last week, clearly soured the mood of buyers of risky assets, counting on an upward correction of the pair before the meeting of the Bank of England. This week, the governor of the central bank, Andrew Bailey, will talk about his position on further monetary policy. If it continues to be dovish, most likely the pressure on the pound will only grow, as representatives of the Federal Reserve System, on the contrary, are going to curtail stimulus measures, which should support the US dollar. High inflation remains the main reason why the Bank of England may change its mind about maintaining stimulus measures, but uncertainty will remain until the publication of the results of the meeting on December 16. An equally serious problem for the UK is a new strain of the omicron coronavirus, which can lead to another lockdown and the closure of the country for quarantine. So far, the authorities have to closely monitor the development of the situation with the new strain, which negatively affects the economy at the end of this year. The COT report for December 7 indicated that long non-commercial positions fell from the level of 52,099 to the level of 48,950, while short non-commercial positions fell from the level of 90,998 to the level of 87,227. This led to the preservation of the negative non-commercial net position almost unchanged: -38,277 versus -38,899 a week earlier. The weekly closing price sank slightly from 1.3314 to 1.3262.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily moving averages, which indicates that the bears control the market.

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

Bollinger Bands

In the case of growth, the upper limit of the indicator around 1.3271 will act as resistance.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit 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 the short and long positions of non-commercial traders.