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

Yesterday was not the most profitable day for trading the British pound, since the bears failed to deal with the level of 1.4201, but the bulls were not that active in this area. Let's take a look at the 5 minute chart and talk about what happened.

A signal was formed to open short positions in the pound in the first half of the day, but it was not implemented. In the best case, one could take around 15 points of profit, or go to zero. In my morning forecast, I drew attention to the 1.4201 level and the UK labor market report. Considering the fact that the report turned out to be better than economists' forecasts - the pound grew to the resistance area of 1.4201. A false breakout was formed in the same place in the first half of the day, which created a sell signal.

In the second half of the day, the bears achieved a breakthrough and a reverse test of the 1.4201 level from the bottom up, but there was no major downward movement either. Regaining control of this level and consolidation at it in the middle of the US session resulted in creating a signal to buy the pound. But as we can see on the chart, this did not provide any result, since the pair spent the rest of the day in a horizontal channel.

Despite all the bears' efforts, the bulls continue to keep the market under their control, dictating the terms. It is quite possible that the consolidation that we saw yesterday will lead to a new leap for the pound after today's CPI report. Considering how the UK economy is recovering, it should certainly outperform economists' forecasts, which will support the British pound. All the bulls need for today is ro rise above the resistance of 1.4212, which was not done yesterday. A breakthrough and test of this level from top to bottom will result in opening new long positions in continuation of the upward trend with the nearest target to exit to the high of 1.4257, where I recommend taking profits. Being able to surpass this level will depend on the fundamentals in the afternoon as well as on the minutes of the Federal Reserve, but we will talk about that later. If GBP/USD breaks out of 1.4257, the next major resistance will be seen in the 1.4310 area. If the pound falls in the first half of the day, the bulls should be present in the area of 1.4147. Forming a false breakout there creates an excellent entry point into continuing the upward trend. If the bulls are not active there, then the pound might be under pressure again. In this case, I do not recommend rushing into long positions: the optimal scenario would be long positions for a rebound from a large low like 1.4078, counting on an upward correction of 25-30 points within the day.

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

If we see the pound rise in the first half of the day, then the best option for opening short positions will be when a false breakout forms in the resistance area of 1.4212, above which it was not possible to break through yesterday. The divergence, which is now forming on the MACD indicator, can also help the bears. A disappointing report on UK inflation and failure to rise above 1.4212 - will be a signal to sell the pound for the purpose of falling to support at 1.4147, where I recommend taking profits. If the bears manage to fall below this range, then only its reverse test from the bottom up can create an additional entry point into short positions, counting on the pair's return to the area of a low like 1.4078. If bears are not active in the area of 1.4212 and the upward trend progresses, then I advise you to refrain from short positions until the next high near 1.4257 has been renewed, from which you can open short positions only if a false breakout is formed. I advise selling GBP/USD immediately on a rebound only in the area of 1.4310 counting on a downward correction of 20-25 points within the day.

The Commitment of Traders (COT) reports for May 11 revealed that both long and short positions have increased. All this happened against the background of a slight downward correction from the pair, which was fully won back after we received good indicators on the rate of contraction of the UK economy in the first quarter 2021. Last month's growth also gave investors hope that the British pound will continue to gain strength. And almost all quarantine restrictions will be lifted in the UK at the beginning of summer, given the good pace of vaccination against coronavirus, we can assume a sharp recovery in GDP in the second quarter of 2021, which will be the highest in the history of the indicator. Such news strengthens investor confidence in the British pound and its prospects. The COT report indicated that long non-commercial positions rose from 52,262 to 64,947. At the same time, short non-commercial positions increased from 32,414 to 36,771, resulting in a non-commercial net position increased to 28,176 from 19,848 a week earlier. Last week's closing price also jumped to 1.41308 against 1.39033.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates that the pound will continue to rise in the short term.

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

Surpassing the upper border of the indicator in the area of 1.4212 will lead to a new wave of growth for the pound. Surpassing the lower border of the indicator in the area of 1.4165 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. 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.