To open long positions on GBPUSD, you need to:
In my morning forecast, I paid attention to the level of 1.3723 and recommended opening short positions from it. Let's look at the 5-minute chart and talk about what happened. It is visible how the bears achieve a breakout of 1.3723, after which the pound begins to fall with a new force. Unfortunately, I did not wait for the reverse test of the level of 1.3723 from the bottom up, which would allow entering short positions, thus, the signal was missed. Now the bulls are trying to defend the level of 1.3688, but at the first test, a strong rebound up did not happen. If the pound does not form a false breakout in this range in the near future, then long positions will need to be abandoned.
The initial task of the pound buyers will be to protect the support of 1.3688. As noted above, only the formation of a false breakout there forms an additional signal to open long positions with the aim of an upward correction in the second half of the day to the resistance area of 1.3723. Major buyers will count on building the lower border of a new ascending channel in this range, and on updating the annual maximum in the area of 1.3757, where I recommend fixing the profits. In the second half of the day, important fundamental reports are not expected, so if the pressure on the pound persists, it is best not to rush to buy but to wait for the update of the minimum of 1.3645, from which I recommend opening long positions immediately for a rebound in the expectation of a correction of 20-25 points within the day.
To open short positions on GBP/USD, you need to:
The sellers of the pound coped with the morning task and will now count on a breakthrough and consolidation below the next support of 1.3688, which is currently being traded. A test of this level from the bottom up will form a signal to open short positions, which will only increase the pressure on the pair and push it to the minimum of 1.3645, where I recommend taking the profit. A more optimal scenario for opening short positions in the US session is an upward correction and the formation of a false breakout in the resistance area of 1.3723. There, you can count on the formation of the upper limit of a new descending channel and the repeated decline of the pound in the support area of 1.3688. I advise you to sell GBP/USD immediately for a rebound only from the annual maximum in the area of 1.3757 with the aim of a downward correction of 20-25 points within the day.
Let me remind you that the COT reports (Commitment of Traders) for January 26 recorded an increase in both long and short positions. This time, there were much more sellers, which led to a decrease in the positive delta. The unsuccessful attempts of the bulls to break above the annual highs still do not pass without a trace, forcing traders to increase short positions in the expectation of a more active downward correction of the British pound. Long non-profit positions rose from the level of 45,904 to the level of 47,360. At the same time, the short non-profit jumped from the level of 32,199 to the level of 39,395, which is a very significant increase. As a result, the non-profit net position declined to 7,965 from 13,705 a week earlier. And although traders are trying to take a more wait-and-see position in the area of annual highs, and this is a consequence of the fact that it is very difficult for the bulls to update them, the demand for the pound will still be quite high. As the quarantine measures are lifted, which were strengthened due to the new COVID-19 strain, the upward movement of the GBP/USD pair will be more active. The support of the population and the labor market, which may last until the beginning of the summer of 2021, will also have a positive impact on the British pound. All the talk about negative interest rates from the Bank of England has no real basis yet. In the near future, a large report of the English regulator on this topic will be published, which can describe in more detail the picture with the further course of interest rates.
Signals of indicators:
Moving averages
Trading is conducted in the area of 30 and 50 daily averages, which indicates the sideways nature of the market.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
If the pair grows, the average border of the indicator in the area of 1.3723 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 9Bollinger Bands (Bollinger Bands). Period 20Non-profit 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 the short and long positions of non-commercial traders.