To open long positions on GBP/USD, you need:
If I paid attention to the 1.3909 level in the first half of the day, then the pair went around this range during the US session. Let's take a look at the 5-minute chart and break down the entry point. The optimal scenario for buying the pound was a downward correction to the 1.3909 area, which happened, forming a false breakout there and being able to return to this range indicated the presence of a large buyer in the market, which did not allow the bears to retest the 1.3909 area with another attempt to fall below this range. This scenario became another signal for building up long positions in order to form a new upward wave towards the bottom of the 40th figure. The bears achieved a breakout of this area closer to the US session, however, it was necessary to test this level from the bottom up in order to enter the market, which I did not wait for. I have highlighted it using blue lines on the chart. The bulls managed to regain control of the pound towards the end of the day, having regained the 1.3909 level. Testing it from top to bottom created a signal to open long positions, but it did not materialize.
A fairly large number of fundamental statistics on the UK economy will be released today. Participants will focus on the report on inflation growth rates, which could significantly affect the British pound. A good consumer price index will certainly bring new buyers of the pound back to the market. Therefore, forming a false breakout in the support area of 1.3862 will be the first signal to open long positions. An equally important task for the bulls is to regain control over resistance at 1.3909, where the moving averages pass, playing on the side of sellers of the pound. A breakout and being able to test this level from top to bottom will lead to creating a new signal to open long positions, the subsequent target will be the annual high of 1.3954, where I recommend taking profits. Problems may arise if buyers are not active around 1.3862. In this case, I recommend postponing long positions until the test of the 1.3820 low, from which you can buy the pound immediately on a rebound. The next major support area is seen only around 1.3778.
To open short positions on GBP/USD, you need:
The initial task of the bears is to break and settle below support at 1.3862, which they have approached twice over the past day. Bad data on UK inflation will certainly increase the pressure on the pound, so a breakout and being able to test this level from the bottom up (1.3862) will create an excellent signal to open short positions in order to push the pair to fall to the 1.3820 low, where I recommend taking profits.The 1.3778 level will be a distant target. In case GBP/USD grows in the first half of the day, then it is best not to rush to sell, but wait for a false breakout to form in the 1.3909 area. I recommend opening short positions immediately on a rebound from a high of 1.3954, counting on a downward correction of 20-25 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 just below 30 and 50 moving averages, which indicates an attempt by the bears to seize the initiative.
Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.
Bollinger Bands
A break of the lower border of the channel at 1.3862 will increase pressure by the pound. In case the pair grows, the upper border of the indicator in the 1.3940 area will act as a resistance.
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.
