To open long positions on GBP/USD, you need:
Yesterday was a profitable day for trading the British pound. Let's take a look at the 5-minute chart and take a look at all the trades that were formed throughout the day. In my morning forecast, I paid attention to the 1.3944 level and recommended making a decision based on it. Forming a false breakout at this level created a good entry point for short positions. As a result, the pair fell to the 1.3892 target level, where I recommended taking profits. The movement was around 50 points. There I advised you to buy the pound when a false breakout was formed, which happened: the bulls did not hesitate as the bears failed to take the pair below 1.3892, which created an excellent entry point for long positions in order to continue the upward trend. The upward movement was around 30 points. The bears managed to surpass this level in the afternoon, however, I did not manage to enter short positions, since I did not wait for the reverse test of 1.3892 from the bottom up.
Important fundamental statistics from the UK will be released today: from retail sales to activity in the manufacturing and service sectors in April. The data may support the pound, so the bulls can count on protecting support at 1.3824. Forming a false breakout at this level can create an excellent entry point for long positions so that the pair can return to the resistance area of 1.3892, where the moving averages are passing, limiting the pair's growth potential. Bulls need to surpass this level in order for the market to go their way. Being able to settle above this area and test it from top to bottom creates a good entry point into long positions, which can lead GBP/USD to the 1.3944 high, where I recommend taking profits. A breakthrough and consolidation above this range, with a test from top to bottom, will push the pound to a monthly high in the 1.4000 area. If the pound falls in the first half of the day and traders are not active around 1.3834, then it is best not to rush to buy: the best option would be to open long positions immediately to rebound from a new local high at 1.3792, or even lower - around 1.3749, counting on an upward correction at 25 -30 points within the day.
To open short positions on GBP/USD, you need:
The bears need to think of a way to protect resistance at 1.3892. Disappointing fundamental reports from the first half of the day can lead to a false breakout, which will create an entry point for short positions and lead to a new downward wave to the support area of 1.3834. A breakthrough and consolidation below this range with a test from the bottom up can create a good signal to open new short positions as we count on GBP/USD to fall to a low like 1.3792, and afterwards the next target will be support at 1.3749, where I recommend taking profits. If the bears are not active in the resistance area of 1.3892, then it is best not to rush to sell: in this case, I advise you to hold back from short positions until the 1.3944 high has been tested, where failure to consolidate and being able to return to the area below this level can create a convenient entry point to the market. I recommend selling GBP/USD immediately on a rebound from a new local high like 1.4000, counting on a downward correction of 25-30 points within the day.
The Commitment of Traders (COT) for April 13 revealed an increase in both long and short positions, while the total non-commercial net position grew, which indicates that the bulls are more active. Good fundamental data, which have recently been released on the UK economy, once again prove that there is a fairly high probability of strong economic growth rates in the second quarter of this year, which will further contribute to the pound's growth in the medium term. The Bank of England has long been talking about how to proceed with stimulating monetary policy, as additional inflation concerns will emerge as the economy grows. The pound's growth at the beginning of this week once again proves its appeal for big players and, most likely, the bull market will only gain momentum by this summer.
The COT report indicated that long non-commercial positions rose from 45,270 to 52,851. At the same time, short non-commercials increased from 25,219 to 27,261, bringing the non-commercial net position to 25,590 from 19,951 weeks earlier. On the contrary, the weekly closing price dropped to 1.3753 from 1.3913.
Indicator signals:
Moving averages
Trading is carried out below the 30 and 50 moving averages, which indicates that the pound will fall further in the short term.
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
Growth will be limited by the upper level of the indicator around 1.3890. In case the pound falls, support will be provided by the lower border at 1.3815.
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.
