In my morning forecast, I paid attention to the 1.1849 level and recommended making decisions on entering the market from it. Let's look at the 5-minute chart and figure out what happened there. An unsuccessful attempt by the bulls to continue the pair's growth in the first half of the day resulted in a false breakdown in the area of 1.1849 and a sell signal for the pound. And although the pair fell by 25 points, I expected a stronger downward movement. The situation has changed a little for the second half of the day, as has the strategy itself.
To open long positions on GBP/USD, you need:
The entire focus will be shifted to fairly important data on US GDP and a report on the number of initial applications for unemployment benefits. If the US economy does not improve, the pressure on the dollar may return, leading to another upward jerk of the pair. But a much more interesting event will be the symposium in Jackson Hole - its first day starts today. The speech of the Chairman of the Federal Reserve System is expected tomorrow, so there are no major movements planned today. An important task of the bulls is to protect the nearest support of 1.1814, just below which the moving averages are playing on the buyers' side. In the case of a decline in the pair after strong data, only the formation of a false breakdown in the area of 1.1814 forms a buy signal to recover to the area of 1.1872. A breakdown and a reverse test from top to bottom of 1.1872 will help strengthen the position of buyers, opening the way to 1.1921. A more distant goal will be a maximum of 1.1972, where I recommend fixing the profits. Just below this level, in the area of 1.1762, the lower boundary of the new ascending channel passes, on which a certain emphasis will be placed. Only a false breakdown at this level will give a new signal to open long positions. You can buy GBP/USD immediately on a rebound from 1.1718 or even lower – around 1.1684 – with the aim of a correction of 30–35 points within a day.
To open short positions on GBP/USD, you need:
The bears need to regain control of the 1.1814 level quickly, but it will be no less critical to miss the resistance of 1.1872. A breakthrough to this level may occur in the case of weak fundamental data on the United States. A false breakout at 1.1814 will provide sellers of the pound with new strength, strengthening the bear market and allowing them to count on a downward movement to the 1.1814 area and a breakdown of this level. A breakthrough and a reverse test from the bottom up of 1.1814 will give an entry point for sale with the prospect of reaching 1.1762, which is very close to the annual minimum of 1.1718. The farthest target will be the 1.1684 area, where I recommend fixing the profits. With the option of GBP/USD growth and the absence of bears at 1.1872, bulls will have a real chance to correct and develop a sharper upward price channel. In this case, I advise you not to rush with sales: only a false breakdown in the area of 1.1921 will give an entry point into short positions. It is possible to sell GBP/USD immediately for a rebound from the 1.1972 level, but only to move down by 30-35 points within a day.
The COT report (Commitment of Traders) for August 16 recorded an increase in both short and long positions, but these changes no longer reflect the real current picture. Serious pressure on the pair, which began in the middle of last week, continues now, and for sure, there will be fewer and fewer people willing to buy the pound in the current difficult macroeconomic conditions. We have a meeting of American bankers in Jackson Hole ahead of us, which may lead to an even greater strengthening of the dollar against the pound. This will happen if the Chairman of the Federal Reserve System, Jerome Powell, announces the preservation of the previous position of the committee regarding an active and tough increase in interest rates in the hope of further combating inflation and bringing it back to normal. The latest COT report indicates that long non-commercial positions increased by 1,865 to the level of 44,084. In contrast, short non–commercial positions increased by 506 to the level of 77,193, which led to an even greater reduction in the negative value of the non–commercial net position to the level of - 33,109 versus -34,468. The weekly closing price remained almost unchanged and amounted to 1.2096 against 1.2078.
Signals of indicators:
Moving Averages
Trading is conducted above the 30 and 50-day moving averages, indicating buyers' attempts to declare themselves.
Note: The period and prices of 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
In the case of growth, the upper limit of the indicator at around 1.1865 will act as 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 use the futures market for speculative purposes and to 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.