FX.co ★ GBP/USD: plan for the European session on April 12. COT reports. Big purchases in the 1.3670 area, bears were active in the afternoon

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

Last Friday, the pound generated several signals for you to enter the market. Let's take a look at the 5 minute chart and break down all the entry points. In my forecast for the first half of the day, I paid attention to two levels: 1.3720 and 1.3670. The pair surpassed the first level so fast that according to my trading system I missed the entry point into short positions. You can clearly see how the bears are trying to surpass 1.3720 and after a short pause, the downward movement of the pound continued. I planned to open short positions only after a reverse test of this area from the bottom up (I marked these conditions with blue lines on the chart). Since this did not happen, my emphasis shifted to support at 1.3670 and to buy the pound there immediately on a rebound. Everything went according to the script here. As a result, the pair bounced up 50 points.

Even despite such high volatility from the pound, which was observed at the end of last week, the strategy for today is as follows: forming a false breakout in the support area of 1.3670 will lead to a signal for you to open long positions in order to restore the pound to the resistance area of 1.3711, which was formed in today's Asian session. Moving averages, playing on the side of sellers, also pass slightly above this level. Surpassing these levels could result in a larger rally for the pair, so bulls will look to a major upward correction above this range. A breakout and consolidation at 1.3711 with a reverse test from top to bottom can result in creating a good entry point into long positions in hopes to renew the high at 1.3741, where I recommend taking profits. The next major resistance is seen around 1.3771. If the bulls are not that active at the 1.3670 low, most likely the pair will be under pressure again: in this scenario, it is best to hold back from long positions until a larger support level like 1.3639 has been tested from where you can open long positions immediately on a rebound, counting on an upward correction of 25-30 points within the day. The next major level is seen around 1.3605.

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

In today's economic calendar we only have speeches by Bank of England Chief Economist Andy Haldane and a member of the BoE Monetary Policy Committee Silvana Tenreyro who will deliver a speech in the middle of the day. It is unlikely that this will lead to serious changes in the market, therefore, during the European session, the emphasis will shift to support at 1.3670 and its breakthrough. Surpassing ang being able to settle below this level with the reverse test from the bottom up (by analogy with the entry point that I discussed above) can create another signal for you to open short positions in order to pull down GBP/USD to a new low like 1.3639, where I recommend taking profits. Below this area, there are quite big prospects for the pair to update 1.3605. In case GBP/USD grows in the first half of the day, then I recommend not to rush to sell: the optimal scenario will be to open short positions, provided that a false breakout is formed in the resistance area of 1.3711, where the moving averages are also located, playing on the side of sellers. It is possible to open short positions immediately from a bigger resistance of 1.3741, counting on a correction of 20-25 points within the day.

The Commitment of Traders (COT) for March 30 recorded a reduction in both long and short positions, while the total non-commercial net position increased. Bulls have been active in the past week with every approach to major support levels, which has led to such a mess in the market. The latest report on the UK economy made it possible to build a new upward correction for the pound, albeit so far only in the short term. Confidence continues to grow among investors and economists that the UK economic recovery is gaining quite good momentum, which will support the British pound this summer, as disagreements grow at the Bank of England over how the economy will develop further and when to respond to all this. Those who expect to buy the pound should take a closer look at the market.

So: long non-commercial positions fell from 51,843 to 47,222. At the same time, short non-commercial positions fell from 30,024 to 22,263, which indicates a serious revision of forces in the market in the near future. As a result, the non-commercial net position rose to 29,959 from 21,819 a week earlier. The weekly closing price dropped to 1.3774 from 1.3859.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates an attempt by the bears to continue the downward trend.

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 of growth, the average border of the indicator in the area of 1.3711 will act as a resistance. You can sell the pound immediately on a rebound after the initial test of the upper border of the indicator in the area of 1.3741.

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.