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

In my morning forecast, I paid attention to the resistance of 1.3536 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. I said that the lack of fundamental statistics could bring back the demand for the pound. If we break above 1.3536, purchases will begin to be more active - and that's what happened. Going beyond 1.3536 and a reverse test of this level led to a signal to open long positions. At the time of writing, the pair has already gone up more than 25 points from the entry point. For the second half of the day, the technical picture has partially changed. And what were the entry points for the euro this morning?

During the American session, data on the NFIB small business optimism indicator and the US foreign trade balance are released. Most likely, the reports will not have any impact on the foreign exchange market but will affect only the stock market, so buyers of the pound have every chance of continuing growth and resuming the bullish trend observed last week. The key task of the bulls will be to protect the support of 1.3530, which they successfully repulsed today in the first half of the day. By lowering the pound lower, buyers risk losing control of the upward trend again. Purchases from this range can be made only if a false breakdown is formed. This will form the first entry point into long positions, and weak data on the American economy will return demand for the British pound. Buyers also need to go above the 1.3577 level, which will open a direct road to monthly highs. Only a test of this range from top to bottom forms an additional buy signal with a rise to 1.3611, where I recommend fixing the profits. In the scenario of a decline in GBP/USD during the US session and the absence of bulls at 1.3530, it is better not to rush into buying risky assets. I advise you to wait for the test of the next major level - 1.3489. Only the formation of a false breakdown will give an entry point to long positions. You can buy the pound immediately on a rebound from 1.3445, or even lower - from this month's minimum of 1.3407, counting on a correction of 20-25 points within a day.

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

The bears have so far moved aside, as all their active attempts to defend 1.3536 have failed. A lot will depend on whether the market will be able to close below 1.3530 at the end of the day or not. The primary task of sellers is to protect the 1.3577 range since it would be "suicide" to issue a pound above this level. The formation of a false breakdown together with strong statistics on the US form an entry point into short positions. In this case, we can count on the return of the bear market and the pair's decline to the support area of 1.3530, where the moving averages are playing on the side of the bulls. A breakdown and a test of this range from the bottom up will give an additional entry point into short positions to fall to 1.3489 and 1.3445, where I recommend fixing the profits. If the pair grows during the American session, as well as weak sellers' activity at 1.3577, it is best to postpone sales to a monthly maximum of 1.3611. I also advise you to open short positions there in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound from 1.3656, or even higher - from a maximum in the area of 1.3697, counting on the pair's rebound down by 20-25 points within a day.

The COT reports (Commitment of Traders) for February 1 recorded a sharp increase in short positions and a reduction in long ones. All this led to an increase in the negative value of the delta. However, it should be understood that the report does not take into account the results of the meeting of the Bank of England, at which it was decided to raise interest rates. Despite this, it did not help the pound much, since everyone understands that such policy changes were made not from a good life, but in the fight against high inflation. Given that the British economy is currently going through hard times and at any moment the pace of economic growth may seriously slow down, the increase in rates did not lead to a rapid increase in the British pound. We should not forget about the increase in interest rates by the Federal Reserve System in March this year, which will be an additional deterrent for buyers of GBP/USD. Some traders expect that the Central Bank may resort to more aggressive actions and raise rates by 0.5% at once, rather than by 0.25% - this will become a kind of bullish signal for the US dollar. The COT report for February 1 indicated that long non-commercial positions decreased from the level of 36,666 to the level of 29,597, while short non-commercial positions increased from the level of 44,429 to the level of 53,202. This led to an even greater increase in the negative non-commercial net position - from -7,763 to -23,605. The weekly closing price dropped from 1.3488 to 1.3444.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily moving averages, which indicates an attempt by buyers to resume the bull market.

Note. The period and prices of 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

In the case of a decline, the lower limit of the indicator around 1.3510 will act as support.

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.