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

I think few people expected such a development of the bearish trend that occurred yesterday. Apparently, there were too many people willing to open long positions in risky assets after receiving weak US fundamental reports, and big players decided to take advantage of this. It is possible that the Afghan conflict also strengthens the dollar's position. Let's take a look at the 5-minute chart and talk about what happened. During the pound's recovery in the European session, it was not enough before the formation of a false breakout at the level of 1.3830, so I was forced to miss this entry point. After the unsuccessful breakdown of the 1.3800 support, the bulls brought the market back under their control and achieved a reverse test of this level, which resulted in forming a buy signal. However, I did not wait for the pair to grow - as a result, the transaction worked at a loss. After a breakout of 1.3767, this area was tested from the bottom up, which formed a signal to sell the pound. To be fair, a couple of points were missing before the technical test of this range, so I was forced to skip this entry into the market.

Today we are waiting for important reports on inflation in the UK, which may increase the pressure on the British pound. Therefore, I do not advise you to rush with long positions against the trend, even in the area of the July lows. If the report surpasses the forecasts of economists, and we can hardly rely on this, the optimal scenario will be long positions from the level of 1.3729. Forming a false breakout there creates a signal to buy GBP/USD with the aim of an upward correction to the resistance of 1.3765, formed yesterday afternoon. Moving averages, playing on the side of the bears, are just above 1.3765, which will limit the pair's upward potential. A breakthrough and the test of 1.3765 from top to bottom creates another signal to buy the pound, counting on a return to 1.3793, where bears will try to form the upper border of a new downward channel, so that the bulls may have problems there as well. The next target will still be the 1.3825 high, where I recommend taking profits. If the pressure on the pound returns, and the bulls show nothing in the support area of 1.3729, the optimal scenario is to buy from a new low like 1.3692, but only after a false breakout has been formed. It is possible to buy GBP/USD immediately on a rebound around 1.3636, counting on an upward correction of 15-20 points within the day.

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

The initial task of the bears is to protect the resistance at 1.3765, above which the moving averages pass, indicating the formation of a new downward trend. The optimal scenario for opening short positions will be the formation of a false breakout at this level, and weak data on inflation growth in the UK will once again confirm the wait-and-see position of the Bank of England, which will weaken the position of the pound even more. In this case, the target will be the first support level of 1.3729, which coincides with the July lows. A fierce struggle will unfold for it. A breakthrough of this area could bring serious pressure back to the pound. The 1.3729 test from the bottom up will create another entry point into short positions and will push GBP/USD even lower - to 1.3692, and there it is close to the 1.3636 low, where I recommend taking profits. If the bears are not active around 1.3765, I advise you to postpone selling until the next major resistance at 1.3793, where the bears will try to build the upper border of the descending channel. I also recommend opening short positions from there only if a false breakout is formed. Selling GBP/USD immediately on a rebound is possible from the local high in the 1.3825 area, counting on a downward correction of 25-30 points within the day.

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.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates a bearish nature of the market.

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

Growth will be limited by the upper level of the indicator in the area of 1.3785. In case of a decline, support will be provided by the lower border of the indicator in the area of 1.3713.

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.