FX.co ★ GBP/USD: plan for the US session on March 4 (analysis of morning trades)

To open long positions on GBP/USD, you need to:

In the first half of the day, a good buy signal was formed for the pound. Let's look at the 5-minute chart and analyze the entry point. It is clear that from the first time, buyers seek to protect the lower border of the side channel 1.3919, from which I recommended opening long positions. Then there is a retest of this area, from which the pair quickly bounces, which is a confirmation of the entry into the purchases of the pound. At the time of writing, the pair has gone up more than 25 points.

While trading will be conducted above the support of 1.3919, we can expect the pound to recover to the resistance area of 1.3988, which is the first reference point for buyers. From a technical point of view, nothing has changed in the afternoon. Only a break and consolidation above the resistance of 1.3988 will form a convenient entry point into the continuation of the bullish trend of GBP/USD to return to the maximum of 1.4062, where I also recommend taking the profits. A more distant target will be the resistance of 1.4115. In the scenario of a repeated decline of the pound in the second half of the day to the support area of 1.3919, it is best to wait for the formation of a false breakout and only then open long positions. If there is no activity on the part of buyers in the area of 1.3919 and good fundamental data on the US economy, I recommend postponing long positions until the test of the minimum of 1.3849 in the expectation of a rebound of 30-35 points within the day.

To open short positions on GBP/USD, you need to:

The bears failed to cope with the support of 1.3919 and now their initial task is to form a false breakout in the resistance area of 1.3988. Only such a scenario, together with good data on the US economy, forms a signal to open short positions in the expectation of a resumption of the bear market and a repeated decline in the GBP/USD in the area of 1.3919. As the morning trading showed, much depends on the breakthrough of this area. Its bottom-up test forms an additional entry point for sales to test the minimum of 1.3849, where I recommend fixing the profit. If there is no activity on the part of the bears in the area of 1.3988, it is best not to rush to sell the pound. I recommend opening short positions immediately for a rebound only from the maximum of 1.4062, based on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.4115.

Let me remind you that the COT reports (Commitment of Traders) for February 23 recorded a reduction in short commercial positions and a sharp increase in long ones. The bulls are active even in the area of annual highs, which only accelerates the upward trend. However, you need to understand that this report takes into account only those prices that were before the fall of the pound in the middle of last week, so at the moment the picture is a little different. In the medium term, the downward correction observed last week will only play into the hands of buyers of the pound. The expectation of curtailing quarantine measures in March this year will support the pound, as will new measures to help the UK population fight the coronavirus pandemic, which will be announced this week by Finance Minister Rishi Sunak. Long non-commercial positions rose from the level of 60,269 to the level of 68,266. At the same time, the short non-profit declined from the level of 38,102 to the level of 37,288, which maintains good prospects for the continued growth of the pound. As a result, the non-profit net position rose to 30,978 from 22,167 a week earlier. The weekly closing price was 1.4067 against 1.3914. The observed downward correction in the pound will only attract new buyers.

Signals of indicators:

Moving averages

Trading is conducted in the area of 30 and 50 daily averages, which indicates some market uncertainty with the further direction.

Note: The period and prices of the 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

A break of the upper limit of the indicator in the area of 1.3970 will lead to a new wave of growth of the pair. A break of the lower limit of the indicator in the area of 1.3919 will increase the pressure on the pair.

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 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit 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 the short and long positions of non-commercial traders.