FX.co ★ GBP/USD: plan for the European session on October 2. COT reports. Pound restless. Will the bears push through 1.2819?

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

Yesterday, when the British pound moved in panic, we managed to achieve only one normal entry into the market in short positions. Let's take a look at the 5-minute chart and analyze the deal. After falling, the bears broke through support at 1.2925, a good entry point to sell then appeared after this level was tested from the bottom up, which brought about 40 points of profit.

Today the levels have changed, but the main one is support at 1.2819, on which a lot depends on at the moment. Bulls have the main task of protecting this range, but I recommend opening long positions from it only when a false breakout has appeared, since this level has already been tested more than three times, and, most likely, it will not stand another test. Therefore, in case buyers are not active in the 1.2819 area, I recommend postponing long positions until a larger support at 1.2754 has been updated, or buy GBP/USD immediately on a rebound from the low of 1.2689, counting on a 30-40 point correction within the day. An equally important task is to break through resistance at 1.2903, which may instill confidence in the bulls. Consolidating at this level and testing it from top to bottom forms a good entry point for the pound in order to return to this week's high of 1.2975. A breakthrough of this range too will open a direct road to the 1.3089 area, where I recommend taking profits.

The Commitment of Traders (COT) reports for September 22 did not record significant changes in the market, as everyone took a wait-and-see attitude and are watching how the economy will react to the next phase of growth in the incidence of COVID-19 and how the situation will develop further. Brexit. Most likely, the pressure on the pound will gradually return as the second wave of coronavirus spreads and the negotiations on a trade deal between the UK and the EU become more complicated, where there is not even a hint of a compromise between the parties. Short non-commercial positions slightly decreased from 41,508 to 40,523 during the reporting week. Long non-commercial positions also decreased from 43,801 to 43,487. As a result, the non-commercial net position remained practically unchanged at 2,964 against 2,293 weeks earlier.

To open short positions on GBP/USD you need:

Pound sellers have a very simple task. To return the market on their side, and to do so they need GBP/USD to fall below 1.2819, which they have been trying to achieve throughout the week. Testing this area from the bottom up, similar to yesterday's sell position from 1.2925, forms a good entry point for short positions. In this case, the next target will be the 1.2754 area, and more persistent sellers will wait until the low of 1.2689 has been updated, which is where I recommend taking profits. In case the pair grows in the first half of the day, even before the US Nonfarm Payrolls report is released, it is best not to rush to sell, but to wait until the high of 1.2903 has been updated, where forming a false breakout forms an entry point to short positions. Selling GBP/USD immediately on a rebound is best done from the weekly high of 1.2975, counting on a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates market uncertainty regarding its direction.

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 D1 daily chart.

Bollinger Bands

A break of the lower border of the indicator in the 1.2819 area will increase pressure on the pound. A breakout of the upper border of the indicator in the 1.2945 area will lead to a new wave of growth in the pair.

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 9
• Bollinger 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.