To open long positions on GBP/USD you need:
In my morning report, I focused on the level of 1.3205 and recommended making decisions to enter the market, taking it into account. Let's observe the 5-minute chart and figure out the entry point. It is obvious that after a series of UK reports were released, from the changes in GDP and industrial production to the service sector activity index, buyers did not manage to defend the support at 1.3205. The failure of this level and the reversed test from the bottom to the top formed a clear signal to open short positions with the prospect of further decline in the pair. The technical picture has not changed.
Significant inflation data will be released in the afternoon. Besides, the further market direction will depend on it. If the report indicates a bigger increase in the consumer price index for November, the US dollar may strengthen significantly against the pound. Consequently, the pair GBP/USD will fall. In case the pound further declines, buyers will have to make a concerted effort to break the lower boundary of the sideways channel at 1.3173. Only formation of a false break will result in a signal to open long positions against the trend. If the data is better than the economists forecasted and bulls are not below 1.3173, I will advise traders not to buy until hitting the new local lows: 1.3144 and 1.3111, where it is possible to open long positions immediately at a rebound, counting on at least 15-20 pips of intraday correction. If bulls manage to defend 1.3173, then a rally above 1.3205 would be a bold move. Only a return to this level and its retest from the top down will form a buy signal with the target of GBP/USD recovery to the resistance area of 1.3237. A similar break of this level and weak US inflation data will develop an easy way to hit the highs of 1.3261 and 1.3268, where I recommend taking profit.
To open short positions on GBP/USD you need:
Sellers of the British pound completed their task successfully and resumed control of the middle of the sideways channel, forming a sell signal. Currently, they are focused on expecting the US inflation report for November of this year. Strong growth data will strengthen the position of the US dollar, resulting in the pound's active sale to the area of the lower border of the channel 1.3173. A similar break of this range, as well as the morning sell signal, will form an additional entry point to the short positions with the prospect of falling to the area of the next monthly lows: 1.3144 and 1.3111, where I recommend taking profit. In case of the pair's rise during the US session and weak sellers' activity after the US data it is better to postpone the selling to the upper border of the side channel 1.3237. I also recommend opening short positions there only in case of a false break. Selling GBP/USD immediately on the rebound is possible only from the major resistance at 1.3261, or even higher, from the high of 1.3286, counting on a pair rebound down by 20-25 pips during the day.
The COT (Commitment of Traders) reports for November 30 recorded an increase in both short and long positions. However, the latter turned out to be numerous, which led to an increase in the negative delta. Last week there were very few fundamental statistics on the UK economy. Besides, all the speeches of the Governor of the Bank of England Andrew Bayley were dovish, which did not increase confidence in the future of the British pound. While representatives of the Bank of England preferred to take a wait-and-see attitude, Federal Reserve System Chairman Jerome Powell's speeches, on the contrary, were hawkish. In his comments he spoke a lot about the expected changes in the monetary policy towards its tightening. The reason for that is pretty high inflation, turned out to be permanent, which causes a lot of problems for the Central Bank. An equally fundamental problem for the UK is the new coronavirus variant Omicron, which could lead to another lockdown. So far, the authorities have to watch the situation with the new variant quite closely, negatively affecting the UK economy at the end of this year. Notably, the Federal Reserve meeting is scheduled next week and a decision on the bond buying program will be taken at it. Therefore, demand for the US dollar is expected to continue in the shorter term. The COT report indicated that long non-commercials rose from 50,122 to 52,099, while short non commercial positions increased from 84,701 to 90,998. This fact led to an increase in the negative non-commercial net position. The delta totaled -38,899 versus -34,579 a week earlier. The weekly closing price decreased from 1.3397 to 1.3314.
Indicator signals:
Moving averages.
Trading is conducted around the 30 and 50 daily moving averages, indicating that bears are trying to return to the market.
Note. The period and prices of moving averages are considered by the author on hourly chart H1 and differ from the common definition of classic daily moving averages on daily chart D1.
Bollinger Bands.
Breakout of the indicator lower boundary at 1.3190 will result in a new wave of decline in the pound. In the case of growth, the upper boundary of the indicator at 1.3237 will act as resistance.
Description of indicators
Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. On the chart, it is marked in yellow;Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. On the chart, it is marked in green;MACD (Moving Average Convergence/Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9Bollinger Bands (Bollinger Bands). Period 20;Non-commercial traders are speculators, such as individual traders, hedge funds and large institutions, which 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;The total non-commercial net position is the difference between short and long positions of non-commercial traders.