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

Yesterday morning I paid attention to the 1.3817 level and recommended making decisions based on it. Let's take a look at the 5 minute chart and talk about what happened. It is clearly seen how the pair is gradually slipping to the support area of 1.3817, after which a false breakout is formed at this level, where I advised to open long positions in hopes of a reversal of the upward trend. The downward movement occurred after a negative revision of the UK GDP for the first quarter of this year. As a result, a signal to buy the pound was generated, and the upward movement was about 50 points.

In the afternoon, the bulls failed to rise above the resistance level of 1.3870, which led to forming a false breakout and a signal to sell the pound. Strong data on the US economy allowed the bears to push the pound back to support at 1.3817, where the trade ended.

Today is an important day for the bulls as they are one step away from losing control of the market. The speech by the Governor of the Bank of England Andrew Bailey may determine the pair's direction in the second half of the week. If Bailey touches on changes in monetary policy, this will strengthen the position of the British pound. Good data on activity in the manufacturing sector will also be a reason for building up long positions. Therefore, the main task of the bulls is to break through and settle above the resistance level of 1.3831, which was formed at the end of Wednesday. Moving averages, playing on the side of the bears, also pass there. A reverse test of this level from top to bottom will generate a buy signal and open a direct road to the 1.3870 area, where I recommend taking profits. The next target will be the high of 1.3922, but it will not be so easy for the bulls to reach it. If the pressure on GBP/USD persists in the first half of the day, and the indicators of manufacturing activity, together with the speech of the Governor of the Bank of England, do not please traders, most likely we will see the pair fall towards the important support level of 1.3787. Forming a false breakout at this level generates a signal to open long positions in hopes of a bear market reversal. If the bulls are not active in the 1.3787 area and a further decline in GBP/USD, it is best to postpone long positions until the 1.3752 low is updated, or even lower - until the 1.3717 support test, from which I recommend buying the pair immediately on a rebound with the aim of an upward correction of 25-30 points within the day.

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

The initial task of the bears will be to protect the resistance at 1.3831, which was formed at the end of yesterday and where the moving averages are, which determine the direction of the market's movement. Forming a false breakout there will be a signal to sell the pound, which will push the pair to the month's low in the 1.3787 area, for which a very serious struggle will begin. A breakthrough of this range and a reverse test from the bottom up can occur only in case we receive a disappointing report on the UK economy, which will lead to forming an entry point into short positions in continuation of the bear market with the purpose of pulling the currency down to 1.3752, where I recommend taking profits. The next target will be the low of 1.3717. If the bears are not active in in the resistance area of 1.3831 and there are hints of a change in monetary policy on the Bailey's part, I recommend postponing short positions until the test of the 1.3870 high, or even higher - to the 1.3922 level, where you can open short positions immediately on a rebound, counting on a downward correction of 25-30 points within the day.

The Commitment of Traders (COT) report June 22 shows that long positions have significantly declined while short positions have increased. The report showed changes in the market after the Federal Reserve's meeting on monetary policy. A similar meeting from the Bank of England, which took place last week, only exacerbated the situation. Many traders were counting on a more proactive stance on interest rates and the bond purchase program from the central bank. But as we already know, as long as no serious inflationary pressures are noticed in the UK, the Bank of England is unlikely to rush to make changes. The spread of the Indian strain of the coronavirus in the UK creates additional difficulties with the full opening of the economy, so traders also do not find reasons for the pound's growth. The economy may show more modest results for the second quarter of 2021. Despite this, the best scenario is to buy the pound for every good decline against the US dollar. The COT report indicates that long non-commercial positions fell from 55,203 to 51,445, while short non-commercial positions, on the contrary, rose sharply from 23,033 to 33,518. As a result, the non-commercial net position decreased from 32,170 to 17 972. Last week's closing price changed significantly and amounted to 1.3924 against 1.4109.

Indicator signals:

Trading is carried out below 30 and 50 moving averages, which indicates the continued bear market.

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 average border of the indicator in the area of 1.3831 will lead to a new wave of growth of the pound. A breakthrough of the lower border of the indicator around 1.3787 will increase the pressure on the pound.

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.