To open long positions on GBP/USD, you need:
In my morning forecast, I drew attention to several levels I recommended making decisions on entering the market. Let's look at the 5-minute chart and talk about what happened. During the pound's recovery during the European session, there was not enough time for a false breakout to form at the level of 1.3830. Thus, I was forced to miss this entry point. After an unsuccessful breakdown of the support of 1.3800, the bulls returned the market under their control and achieved a reverse test of this level, which led to the formation of a buy signal. However, this area was also broken at the time of writing, which led to a revision of the trading strategy for the second half of the day. Despite the fairly good data on the unemployment rate in the UK, the British pound continued its decline against the US dollar as traders are afraid of maintaining a super-soft monetary policy from the Bank of England for much longer than previously expected. The initial task of the bulls is now to form a false breakdown at the level of 1.3789 since only such a scenario will lead to the formation of a new entry point into long positions to return to the resistance area of 1.3825, from which the entire sale occurred today. Just above this level, there are moving averages that play on the sellers' side, limiting the pair's upward correction. A breakout and a test of 1.3825 from top to bottom form an additional signal to buy the pound already in the expectation of a return to 1.3852, where I recommend fixing the profits. The longer-range target remains the maximum of 1.3876. Suppose the pressure on the pound continues after the report on retail sales in the US, and the bulls do not show anything in the support area of 1.3789. In that case, the optimal scenario will be purchases from 1.3767, but only after forming a false breakdown. You can buy GBP/USD immediately for a rebound in the area of 1.3742 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 sellers is to break through and consolidate below the next weekly low of 1.3789, which also acts as the lower boundary of the wide side channel in which the pair has been since August 11 of this year. A break in this area and a reverse test from the bottom up will strengthen the bear market and bring the pair down to a minimum of 1.3767, which will become an intermediate stop. A more distant target will be the area of 1.3742, where I recommend fixing the profits. In the case of GBP/USD growth after the US retail sales data, and the report is expected to be worse than economists' forecasts, it is best to open short positions if a false breakdown is formed in the area of 1.3825. You can sell GBP/USD immediately for a rebound from the local maximum in the area of 1.3852, or even higher - from the upper border of the side channel 1.3876, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for August 10 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 the attitude to monetary policy will change in the direction of tightening in the near future. Also, additional pressure on the pound was exerted by the report on inflation in the United States, which disappointed investors and coincided with economists' forecasts. It suggests that the Federal Reserve System will not rush to make changes in its monetary policy, especially against the appearance of another problem-disruptions with supply chains in the South Asian region. All this can seriously affect pricing and the economic recovery rates of several countries, including the UK. However, as before, 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 from 43,119 to the level of 44,750.
In contrast, short non-commercial positions decreased from the level of 43,205 to the level of 37,680, indicating continued purchases from major players. As a result, the non-commercial net position returned to the positive side and amounted to 7070, against -86 a week earlier. The closing price of last week fell from the level of 1.3891 to 1.3846.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily averages, which indicates a further decline in the pound.
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 lower limit of the indicator in the area of 1.3789 will lead to a larger sale of the pair. If the pound rises, the average border of the indicator in the area of 1.3825 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 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.