GBP/USD: plan for the European session on April 16. Pound bulls did not cope with 1.3804, so the pair might be under pressure any time

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

Several signals to enter the market were formed yesterday. Let's take a look at the 5 minute chart and break it down. In the first half of the day, after several unsuccessful attempts to surpass the 1.3792 level, a false breakout was formed and a signal to open short positions appeared. As a result, the downward movement reached around 30 points and that's it. We did not reach the designated targets. I revised the levels in my afternoon forecast. During the US session, there was another attempt to rise above resistance at 1.3804, but it also failed, and everything went by analogy with the morning signal: forming a false breakout - opening short positions and pulling down the pound by around 25 points within the day. I never got out of the horizontal channel.

The technical picture for today's European session has not changed that much, except for the revision of the nearest support level, on which the bulls will be focused on. Protecting the 1.3749 level and forming a false breakout there creates a signal for entering long positions, counting on the GBP/USD pair's growth in the first half of the day so it can go back to resistance at 1.3804. If bulls are not active in the support area of 1.3749, then it is best not to rush to buy: the best option would be to open long positions immediately on a rebound from a large local low at 1.3706, counting on an upward correction of 25-30 points within the day. The next big support is seen at the 1.3670 area. There are no fundamental reports for the UK today, so you should focus on the speech of Deputy Governor of the Bank of England for Financial Stability Jon Cunliffe. An important task for the pound bulls is to surpass the 13804 level. Pushing the pair to settle on this range and testing it from top to bottom can create an entry point to long positions in continuation of the upward trend that formed on April 8th. Such a scenario will surely open a direct road to the area of the new high at 1.3838, while the next, large area of resistance is seen around the 1.3876 level, where I recommend taking profits.

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

Given that the pair remains in the horizontal channel, much depends on which way the exit is formed. As long as GBP/USD is in the immediate vicinity of support at 1.3749, then the bears will be focused on surpassing this level. Only a breakthrough and consolidation below the 1.3749 level, along with being able to test it from the bottom up, can create a good signal for opening short positions in hopes that the pound would fall to a low like 1.3706. A more distant target will be support at 1.3670, where I recommend taking profit. It is best not to rush to sell in the presence of an upward correction of GBP/USD in the first half of the day: forming a false breakout in the resistance area of 1.3804 creates a convenient entry point into short positions with the aim of returning to support at 1.3749. If the bears are not active in this range, then I recommend holding back from short positions immediately for a rebound from the new high of 1.3838, counting on a downward correction of 25-30 points within the day. The next major resistance is seen in the area of 1.3876.

The Commitment of Traders (COT) for April 6 revealed that long positions decreased and short ones increased, while the total non-commercial net position fell. Bears have been actively selling the pound last week amid a tense Brexit situation, which led to riots in Ireland by the end of the week. Good fundamental reports on the UK economy that came out last week resulted in a high surge in volatility, afterwards the pair continued to fall. However, investors and economists believe that the UK economy is recovering and it is gaining quite good momentum. This will support the pound this summer. Meanwhile, at the Bank of England, the controversy over changes in monetary policy has long been growing, as additional inflation problems emerge as the economy grows and this will have to be addressed. Those who wish to buy the pound should take a closer look at the market, since there are quite good prices now, which may not be available in the near future.

So: long non-commercial positions fell from 47,222 to 45,270. At the same time, short non-commercial positions rose from 22,263 to 25,219, which indicates that bears are trying to control the market in the short term. As a result, the non-commercial net position fell to 19,951 from 21,819 a week earlier. On the contrary, the weekly closing price rose to 1.3913 from 1.3774.

Indicator signals:

Moving averages

Trading is carried out just below the 30 and 50 moving averages, which indicates an attempt by the bears to resume the pair's downward correction.

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 upper border of the indicator in the area of 1.3800 will lead to a new wave of growth for the pound. Surpassing the lower border of the indicator in the area of 1.3749 will increase the pressure on the pair.

Description of indicators