To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3837 and recommended making decisions on entering the market. Let's look at the 5-minute chart and talk about what happened. It is visible how the pair descends to the area of 1.3837. If you missed this signal, then you did the right thing. Otherwise, those who entered long positions further along the trend are also counting on more active actions on buyers aimed at breaking 1.3871. From a technical point of view, nothing has changed. The buyers coped with the initial task and managed to protect the level of 1.3837. In the case of a repeated decline of the pound to this range after the data on the manufacturing index in the US, and the indicators should far exceed the forecasts of economists, plus the formation of a false one there - all this forms a signal to open long positions with the aim of an upward correction to the resistance of 1.3871. In the area of 1.3837, there are moving averages that play on the buyers' side. Thus, this is an additional plus for the bulls. A breakout and a test of 1.3871 from the top down, which could not be done last Friday - all this forms an additional signal to buy the pound already counting on a return to 1.3904, the test of which will mean a break in the downward trend. The longer-term target remains the maximum of 1.3926, where I recommend fixing the profits. If the pressure on the pound returns, and the bulls do not show anything in the support area of 1.3837 – the optimal scenario will be purchases from 1.3815, but only after forming a false breakdown. You can buy GBP/USD immediately for a rebound in the area of 1.3792 with the aim of an upward correction of 15-20 points within the day.
To open short positions on GBP/USD, you need:
The initial task of the bears is to protect the resistance of 1.3871, above which it has not yet been possible to break through on Friday, and in general, this range is important for both sellers and buyers. The optimal scenario for opening short positions will be the formation of a false breakdown at 1.3871, which will return pressure on the pound and form a signal to open short positions to reduce the pair to a minimum of 1.3837. Given that the bulls gave a strong rebuff at 1.3837 in the first half of the day, only a break in this area can return pressure on the pound. The test of 1.3837 from the bottom up will push GBP/USD even lower - to 1.3815, and it is just a short distance to the minimum of last week - 1.3792, where I recommend fixing the profits. A more distant target will be the area of 1.3768. In the absence of active sellers around 1.3871, I advise you to postpone sales until the next major resistance of 1.3904. 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 local maximum in the area of 1.3926, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for August 3 recorded a reduction in short positions and a sharp increase in long ones. All this is explained by the results of the meeting of the Bank of England, where representatives again started talking that in the near future, the attitude to monetary policy will change in the direction of tightening. It brought back the demand for the "sleeping all week" British pound, which allowed us to change the balance of power in the net position. After lifting all quarantine restrictions in the UK, the panic has also receded, which allows the economy to continue to "breathe deeply." Currently, there is a slight pressure on the pound. However, it is mainly due to excellent indicators on the American economy and the labor market. However, I advise you to stick to the strategy of buying the pound with each significant decline, as the big players do. The COT report indicates that long non-commercial positions increased 41,194 to the level of 43,119.
In contrast, short non-commercial positions decreased from the level of 46,878 to the level of 43,205, indicating continued purchases from major players. As a result, the non-commercial net position remained negative and amounted to -86 against -5,684 a week earlier. The closing price of last week jumped from the level of 1.3826 to 1.3891.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily averages, indicating an attempt by the bulls to keep the market under their control somehow.
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
A break of the upper limit of the indicator in the area of 1.3875 will lead to a new wave of growth of the pair.
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.
