To open long positions on GBP/USD, you need:
In my morning forecast, I spoke in detail about two scenarios that could be realized. Let's look at the 5-minute chart and figure out what happened in the end. It is visible how the descent to the support of 1.3708 and the formation of a false breakdown gives an excellent signal to enter long positions in the expectation of continuing the bull market that we observed yesterday. But I also warned that buyers would have serious problems if we do not see active purchases and rapid growth from 1.3708. And so it happened: after several vague attempts to grow, the pound finally consolidated below 1.3708, and the test of this level from the bottom up formed an excellent entry point into short positions. At the time of writing, the pair has gone down more than 40 points and is very close to the level of 1.3670, for which the main struggle will unfold in the second half of the day. During the US session, we are waiting for another speech by the chairman of the Federal Reserve System, Jerome Powell, which may tip the scales in favor of buyers of the US dollar – this will put even more pressure on the GBP/USD pair. Only the formation of a false breakdown in the area of 1.3670 forms a signal to open long positions in the hope of restoring the pair in the second half of the day. In this case, the bulls will be able to confirm the lower limit of the new ascending channel, which passes just near this range. If everything goes according to this scenario, the next goal of the bulls will be to regain control over the resistance of 1.3712. A breakout and a reverse test of this level from top to bottom form an additional entry point into long positions in the expectation of a jump up to 1.3747, where I recommend fixing the profits. A more distant target will be the area of 1.3774. However, it will be available in the event of a very soft speech by the chairman of the Federal Reserve System, which is scheduled for the afternoon. If the pressure on GBP/USD persists during the US session, and the bulls do not show anything in the support area of 1.3670, it is best not to rush with long positions. The optimal scenario will be the purchase of the pound from the level of 1.3635. I advise you to open long positions in GBP/USD immediately for a rebound in the area of 1.3604 with the aim of an upward correction of 15-20 points within the day.
To open short positions on GBP/USD, you need:
The sellers of the British pound coped with the initial task perfectly in the first half of the day. Now their focus will be on protecting the resistance of 1.3712 and on the breakdown of 1.3670. In the case of an upward correction of the pound in the second half of the day, only the formation of a false breakdown at the level of 1.3712 will return pressure on the pair, which will push it to the next support 1.3712. Only a breakthrough and a test of this area from the bottom up will form an additional entry point into short positions, which will dump GBP/USD lower – to 1.3635. It will be possible to talk about such a strong bear market in the case of hawkish statements by the chairman of the Federal Reserve System on tightening monetary policy in the United States. The farthest target for today will be the minimum of this week – 1.3604. In the absence of active actions of bears around 1.3712, I advise you to postpone sales to a large resistance of 1.3747. I also recommend opening short positions from there only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from the maximum in the area of 1.3774, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for September 14 recorded a sharp positive dynamics of the net position and a fairly large influx of long non-commercial positions, along with a reduction in short ones. And although the British pound remains under pressure in pair with the US dollar, a clear decline in the trading instrument indicates a fairly high interest in long positions on the part of major players. It is quite possible that the sharp increase in inflation in the UK last week forced many traders to reconsider their attitude to the monetary policy of the Bank of England in the direction of its possible tightening. However, the fact that representatives of the Bank of England are in no hurry to talk about these changes affects the activity of traders. I advise you to continue to adhere to buying the British pound with any good decline. The lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the Bank of England in the future. The COT report indicates that long non-commercial positions increased sharply from 29,348 to the level of 44,161.
In contrast, short non-commercial positions decreased 53,872 to the level of 39,371, which indicates a preponderance towards the buyers of the pound and the leveling of the market situation. As a result, the non-commercial net position returned to a positive value and increased from -24,524 to 4,790 a week earlier. The closing price of last week was almost unchanged and amounted to 1.3837 against 1.3838 a week earlier.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily averages, indicating a redistribution of market forces after yesterday's growth.
Note: The author considers the period and prices of moving averages 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 growth, the upper limit of the indicator in the area of 1.3747 will act as a resistance.
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 specific 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.
