To open long positions on GBP/USD, you need to:
In my morning forecast, I paid attention to the resistance of 1.3792 and recommended actions based on it. Let's look at the 5-minute chart and talk about what happened. It is seen that after several unsuccessful attempts to break the level of 1.3792, a false breakout is formed and a signal is formed to open short positions. As a result, the downward movement was about 30 points and that was the end of it. We did not reach the designated goals. At the time of writing, we had to revise the nearest support and resistance levels, as the technical picture has changed slightly.
The bulls stopped today at 1.3804, so in the second half of the day, they urgently need to break above this resistance. Only a consolidation at this level with a test of it from top to bottom forms an entry point into long positions in the continuation of the upward trend formed on April 8. Such a scenario will open a direct road to the area of a new high of 1.3838, while the next large resistance area is visible near the level of 1.3876, where I recommend taking the profits. In the scenario of a decline in GBP/USD in the second half of the day, all that buyers need is to protect the support of 1.3762, which was formed during the European session. Just above this level, there are also moving averages that play on the side of the bulls. The formation of a false breakout there forms an excellent signal to enter long positions, counting on the growth of GBP/USD back to the resistance of 1.3804. In the scenario of the absence of bull activity in the support area of 1.3762, it is best not to rush with purchases: the best option is to open long positions immediately on a rebound from a large local low of 1.3715, based on an upward correction of 25-30 points within the day. The next major support is seen in the area of 1.3670.
To open short positions on GBP/USD, you need to:
Sellers did a great job with their morning problem of defending the resistance of 1.3792, but now this level is slightly shifted up. The main task of the bears for the second half of the day will be to protect the new range of 1.3804, and only the formation of a false breakdown there will form a signal to open short positions. This will lead to a rapid decline in GBP/USD to the midpoint of the channel of 1.3762, where I recommend taking the profits. An equally important goal for sellers will also be to regain control of this level. Only strong fundamental data on the US economy will lead to a breakthrough and consolidation below the range of 1.3762, and a reverse test of it from the bottom up will form a good signal to open short positions in the continuation of the bearish correction to the minimum of 1.3715. With the growth of GBP/USD during the US session above the level of 1.3804, it is best not to rush to sell: the best option will be short positions immediately on the rebound from the new resistance of 1.3838, based on a downward correction of 25-30 points within the day. The next major resistance is seen in the area of 1.3876.
Let me remind you that the COT reports (Commitment of Traders) for April 6 recorded a reduction in long positions and an increase in short ones, while the total non-commercial net position decreased. Bears actively sold the pound all last week amid the tense situation with Brexit, which by the end of the week led to mass riots in Ireland. Good fundamental data that was released on the UK economy last week led only to a high spike in volatility, after which the pair continued its decline. However, investors and economists remain confident that the UK economic recovery is gaining quite a good momentum, which will support the British pound in the summer of this year. The Bank of England has long been increasingly divided over changes in monetary policy, as the economy grows, there will be additional problems with inflation, which will need to be responded to. Those who expect to buy the pound should take a closer look at the market, as now there are quite good prices, which may not be in the near future. Thus, long non-profit positions declined from the level of 47,222 to the level of 45,270. At the same time, the short non-profit rose from the level of 22,263 to 25,219, which indicates an attempt to control the market by sellers in the short term. As a result, the non-profit net position fell to the level of 19,951 from the level of 21,819 a week earlier. The weekly closing price, on the contrary, rose to 1.3913 from 1.3774.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily averages, which indicates a possible continuation of the pound's growth in the short term.
Note: The period and prices of the moving averages are considered by the author 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 lower limit of the indicator in the area of 1.3762 will increase the pressure on the pair. A break of the upper limit in the area of 1.3800 will lead to a new wave of growth of the pound.
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 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 the short and long positions of non-commercial traders.
