To open long positions on GBP/USD, you need:
Last Friday, there were no signals to enter the market due to the closure of several European exchanges in connection with Good Friday, which led to low volatility. Only a small surge was observed during the US session, after the US labor market report was released, however, even at that moment it was not possible to reach the indicated support or resistance levels.
Easter Monday is celebrated in the EU today, so many European markets will be closed again, and volatility and trading volume in the morning remain at their lowest. In this regard, in order to prevent false entry points, it is best to rely on Friday's levels. Bulls are faced with the task of surpassing and consolidating above resistance at 1.3863, which, in my opinion, will limit the pair's growth potential in the first half of the day. A consolidation at this level and its test from top to bottom creates a good entry point into long positions with an exit to the high of 1.3914, where I recommend taking profits. The next major resistance is seen at 1.3953. In case GBP/USD falls during the European session, buyers will have to think about protecting support at 1.3805, just above which the moving averages are, playing on their side. Forming a false breakout there creates a signal to enter long positions in hopes that GBP/USD would continue rising to resistance at 1.3863. If bulls are not active in the support area of 1.3809, then it is best not to rush to buy: the best option would be to open long positions immediately on a rebound from the 1.3760 low, counting on an upward correction of 25-30 points within the day. The next major support is seen at 1.3719.
To open short positions on GBP/USD, you need:
The bears' initial goal is to protect resistance at 1.3863. Forming a false breakout there creates the first signal to open short positions in hopes of ending the GBP/USD upward correction. In this case, the nearest target will be support at 1.3805, which the bears did not reach last Friday. Moving averages also pass slightly above this level, limiting the downward potential. Therefore, a breakthrough and test of the 1.3805 level from the bottom up creates a new signal to open new short positions in hopes that GBP/USD will continue to fall to a low in the 1.3760 area, where I recommend taking profits. This scenario will be realized only in case we receive an upbeat report on the index of business activity in the US services sector from ISM. Although if you take Friday's Non-Farm Employment report last week, even its excellent performance did not seriously affect the market and did not lead to an instant strengthening of the US dollar. If bears are not active at the 1.3863 level: then it is best not to rush to sell, but instead you should wait for a test of a new high at 1.3914, from where you can open short positions immediately on a rebound, counting on a downward correction of 25-30 points within the day.
The Commitment of Traders (COT) report for March 23 showed that long positions decreased while short ones increased. The pound fell due to the strong dollar, as the US is showing reasonably good growth rates after an active vaccination program carried out this winter and the implementation of a $1.9 trillion support plan. But it is worth paying attention to the fact that recent reports on the UK economy have been quite good, which could be the first signal for the pound's bulls, who are counting on an active medium-term growth of the pair this spring. Given that the data in the COT reports are lagging behind, the picture could dramatically change by the end of this week. There is a growing confidence among investors and economists that a recovery in the UK is just around the corner. This is confirmed by the fact that disagreements are growing in the Bank of England over how the economy will develop further and how to react to this. Those who expect to buy the pound should take a closer look at the market. And so, long non-commercial positions fell from 55,190 to 51,843. At the same time, short non-commercial positions increased from 26,590 to 30,024, which indicates the sellers' control over the market. As a result, the non-commercial net position fell to 21,819 from 28,600 weeks earlier. The weekly closing price dropped to 1.3859 against 1.3898.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates an attempt by the bulls to continue the upward correction.
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 lower border of the indicator in the 1.3845 will lead to a new wave of growth for the pound. A breakout of the lower boundary at 1.3815 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.
