To open long positions on GBP/USD, you need:
I drew attention to the 1.3843 level in my morning forecast and advised you to act based on it. The bears' unsuccessful attempt to continue the downward trend led to forming a false breakout in the support area at 1.3843 and creating a signal to open long positions. Resistance at 1.3899 is the target, to which the pound reached without a single correction, thereby proving the presence of a large buyer in the market. The upward movement brought about 55 points. The bulls achieved a breakdown and consolidation above 1.3899 during the US session, but the reverse test of this level did not take place, which forced me to miss the deal. I recommended selling the pound on a rebound from 1.3949 with a target of 25-30 point correction. The downward movement was about 20 points. The breakout and consolidation above 1.3949 and testing this level from top to bottom led to creating another entry point to long positions, after which the pound rose by another 30 points, and only then the profit was taken and the pair fell. For the sake of fairness, take note that I missed a buy entry in the 1.3949 area, as I did not believe in such a strong continuation of the pound's growth.
Important fundamental reports on the PMI in the manufacturing sector and the PMI in the UK services sector will be released today, which may breathe new life into buyers of the pound, but on condition that the indicators turn out to be better than economists' forecasts. The optimal scenario for opening long positions in order to sustain the bull market is when a false breakout forms in the support area of 1.3927, just below which there are moving averages, playing on the side of buyers. In this case, we can count on a new wave of growth of the pound and its return to the area of yesterday's high of 1.3983, the breakout of which depends on the pair's succeeding growth. A breakout and test of this level from top to bottom will result in creating a new signal to open long positions in order to update 1.4036, where I recommend taking profits. If buyers are not active in the 1.3927 area and the growth should be quite sharp from this level, I recommend postponing long positions until the test of the 1.3884 low, from which you can buy the pound immediately on a rebound, counting on an upward correction of 25-30 points within the day... I also recommend buying GBP/USD immediately on a rebound from a low of 1.3840.
To open short positions on GBP/USD, you need:
The initial task of the bears is to regain control of support at 1.3927, which will not be so easy given the bull market that we saw yesterday. A disappointing fundamental report on the UK economy and being able to test this area from the bottom up creates an excellent signal to open short positions in order to fall to a low of 1.3884, which is an intermediate target. The 1.3840 level is a distant target, where I recommend taking profits. It is best not to rush to sell in case GBP/USD grows in the first half of the day, but wait for a false breakout in the 1.3983 area. You can open short positions immediately on a rebound from the high of 1.4036, counting on a downward correction of 25-30 points within the day.
The Commitment of Traders (COT) reports for February 9 recorded a sharp increase in long non-commercial positions and a reduction in short ones. This led to a rather strong increase in the positive delta. Bulls are making their way to new highs on good news from UK vaccinations. Last week's UK GDP report only resulted in a larger build-up in long positions, in anticipation of a strong economic recovery in early 2021. Long non-commercial positions rose from 53,658 to 60,513. At the same time, short non-commercial positions decreased from 44,042 to 39,395, which only strengthened the bullish sentiment. As a result of this, the non-commercial net position rose to 21,118, against 9,616 a week earlier. The weekly closing price was 1.3745 against 1.3675. The fact that the bulls held their positions at such high volatility within the week once again suggests that the pair is clearly set to overcome annual highs and quickly return to the 40th figure area by this summer. I recommend betting on the pound's appreciation. As quarantine measures are lifted, which are expected to be phased out in February this year, the demand for the pound will only increase. We are expecting news about the support of the population and the labor market in the UK in March, which is also pushing the pound to growth.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates the pound's succeeding growth in the short term.
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
A breakout of the upper border of the channel at 1.3983 will lead to a new wave of growth in the pound. A breakout of the lower boundary at 1.3927 will increase 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.
