Yesterday there was one signal formed to enter the market. Let's take a look at the 5-minute chart and see what happened. I paid attention to the 1.1849 level in my morning forecast and advised making decisions from it. An unsuccessful attempt by the bulls to continue the pair's growth in the first half of the day resulted in forming a false breakout in the area of 1.1849 and a signal to sell the pound. And although the pair fell by 25 points, I expected a stronger downward movement. The technical picture changed in the second half of the day, but it was not possible to receive signals to enter the market.
When to go long on GBP/USD:
Today, there is still no important fundamental statistics for the UK, so traders will wait for Federal Reserve Chairman Jerome Powell's speech and react to his statements - there is no other reason for a surge in volatility. Taking into account that trading is carried out in the area of moving averages, the best scenario would be long positions in the area of the nearest support at 1.1794, which will give a chance for a continuation of the upward correction with a return to 1.1835. A breakthrough and test from top to bottom of this range will testify to the continued growth of GBP/USD and create a buy signal with growth to a more distant level of 1.1872, a breakthrough of which will depend entirely on Powell's statements. The farthest target will be the area of 1.1921, where I recommend taking profits.
If the GBP/USD falls and there are no bulls at 1.1794, the pressure on the pair will increase. A breakthrough of this range will allow the bears to break out of the triangle and continue the downward trend. In this case, I advise you to postpone long positions until the next support at 1.1756. You can buy there only on a false breakout. I recommend opening long positions on GBP/USD immediately for a rebound from 1.1718, or even lower - around 1.1684, counting on correcting 30-35 points within the day.
When to go short on GBP/USD:
Yesterday, the bears tried with all their might to keep the market under their control, and they succeeded. Good statistics for the US provided help. The lack of statistics on the UK today is unlikely to benefit anyone. I do not rule out a sharp movement from the pound up to the area of 1.1835 even before Powell's speech. The best scenario for selling the pound would be forming a false breakout at this level, which would allow us to return to the intermediate support at 1.1794. A breakdown and reverse test of this range will provide an entry point for selling with a fall to 1.1756 and will cross out all the bulls' efforts to build an upward correction of the pair. A more distant target will be the area of 1.1718, where I recommend taking profits.
In case GBP/USD grows and there are no bears at 1.1835, the chances of a larger upside correction will seriously increase, and bulls will have an excellent opportunity to return to 1.1872. Only a false breakout there will provide an entry point into short positions based on the pair moving down. If there is no activity there, I advise you to sell GBP/USD immediately for a rebound from 1.1921, counting on the pair's rebound down by 30-35 points within the day.
COT report:
According to the Commitment of Traders (COT) report from August 16, both short positions and long positions increased, 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 those who want to buy the pound in the current difficult macroeconomic conditions will become less and less. Ahead of us is a meeting of American bankers in Jackson Hole, which may lead to even greater strengthening of the dollar against the pound. This will happen on the condition that Federal Reserve Chairman Jerome Powell announces the preservation of the committee's previous position regarding the active and tough increase in interest rates, counting on the further fight against inflation and bringing it back to normal. The latest COT report indicated that long non-commercial positions rose 1,865 to 44,084, while short non-commercial positions rose 506 to 77,193, further narrowing the negative non-commercial net position to -33,109 versus -34,468. The weekly closing price remained virtually unchanged at 1.2096 versus 1.2078.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50-day moving averages, which indicates the sideways nature of the market before important events.
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
In case the pair goes down, the lower border of the indicator around 1.1794 will act as support.
Description of indicators
Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9Bollinger Bands (Bollinger Bands). Period 20 Non-commercial 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 short and long positions of non-commercial traders.