To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3728 and recommended that you decide on entering the market from it. Let's look at the 5-minute chart and figure out what happened. It is visible how the bulls achieve a breakout of the resistance of 1.3728 and test this level from top to bottom, which leads to the formation of a signal to open long positions. However, as buyers did not try, they failed to catch on to new local highs. From a technical point of view, nothing has changed much, except for the nearest support and resistance levels. The focus of the bulls will now be shifted to data on changes in the volume of orders for long-term goods. However, they are unlikely to play on the side of buyers of the pound. A breakout and a reverse test of the level of 1.3743 from top to bottom will form a new signal to buy GBP/USD, which will push the pair even higher – to the area of 1.3782. A breakdown of this area will also open a direct road to a large resistance of 1.3810, where I recommend taking the profit. A longer-range target will be a maximum of 1.3841. If the pressure on GBP/USD returns in the afternoon, I advise you not to rush into purchases. An important task for the bulls remains to protect the support of 1.3706, where it will be possible to build the lower border of the new ascending channel. The formation of a false breakout forms a good entry point into long positions. Otherwise, the best buy scenario will be a test of the next support of 1.3671. However, it is best to wait for the formation of a false breakdown. I advise you to watch the GBP/USD purchases immediately for a rebound only from the minimum of 1.3634, based on an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears managed to give an excellent rebuff to the buyers of the pound. However, they have not yet managed to cope with more important tasks. The primary goal of sellers is to regain control over the new support level of 1.3706. A breakthrough of this area and its reverse test from the bottom-up forms a signal to open short positions in the expectation of a decline to the level of 1.3671. Strong data on the US economy will lead to a breakout of this range. A similar signal will form another entry point into short positions to demolish the stop orders of the bulls and a larger fall to the area of the minimum 1.3634, where I recommend fixing the profits. In the case of a repeated growth of the pound in the second half of the day in the resistance area of 1.3743, the formation of a false breakdown will form a sell signal for GBP/USD. I advise you to open short positions on the pound immediately for a rebound from the larger resistance of 1.3782, or even higher - from the maximum of 1.3810, counting on the pair's rebound down by 20-25 points within the day.
The COT reports (Commitment of Traders) for August 17 recorded a reduction in both short and long positions. The fact that representatives of the Bank of England are in no hurry to talk about changing monetary policy affects the activity of traders. Last week's data on retail sales and inflation in the UK proved once again that no one would rush to raise interest rates until the end of 2022, and this is a fairly long time horizon. It put pressure on the British pound. But I have repeatedly noted that the lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the Bank of England in the future. The COT report indicates that long non-commercial positions decreased from the level of 44,750 to the level of 41,898.
In contrast, short non-commercial positions decreased from the level of 37,680 to the level of 37,2474, indicating an almost complete balance in the balance of power. As a result, the non-commercial net position slightly decreased and amounted to 4,651, compared to 7,070 a week earlier. The closing price of last week remained almost unchanged at 1.3840 against 1.3846.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily averages, which indicates the sideways nature of the market in the short term.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the upper limit of the indicator in the area of 1.3740 will lead to a new wave of growth. A break of the lower limit of the indicator in the area of 1.3706 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. 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 specific 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.
