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

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

In my morning forecast, I paid attention to the resistance of 1.3935 and recommended that you make decisions on entering the market from it. Let's look at the 5-minute chart and analyze the entry points. The data on activity in the service sector pleased traders, as once again, there was an increase in the indices to the highs. Immediately after that, it was possible to observe the pair's recovery to the resistance area of 1.3935. However, the bulls did not have enough strength to stay above this range - if the buyers restrained the first pressure, then on the second attempt, the bears still returned the pair to the level of 1.3935, forming a false breakdown and a signal to open short positions. When writing the forecast, the situation had not changed much, and trading continued around the area of 1.3935, which forced us to revise the technical picture for the pair for the American session. The buyers' focus is now shifted to the resistance of 1.3951, which was formed on July 30 of this year. Only a breakout and a test of this level from top to bottom will lead to the formation of a signal to open long positions in the continuation of the pound's growth. However, we all remember that tomorrow there will be a meeting of the Bank of England. Changes in monetary policy are unlikely to be adopted, which significantly limits the upward potential of the pair and the bull market. Therefore, be extremely careful with purchases under monthly highs. In the growth above 1.3951, the nearest target of the bulls will be the resistance of 1.3980. A similar breakout of this level with a top-down test forms another entry point into long positions based on the update of 1.4019, where I recommend fixing the profits. With the option of a decline in GBP/USD in the second half of the day against the background of strong data on the US service sector, buyers will have to think carefully about protecting the support of 1.3902, above which the moving averages are playing on the side of the bulls. Only the formation of a false breakdown will lead to a signal to open long positions in the hope of restoring the pair and continuing the upward trend. In the absence of active actions on the part of the bulls in the area of 1.3902, it is best to postpone long positions until the low of 1.3846 is updated, where you can buy the pound immediately for a rebound with the aim of an upward correction of 25-30 points within the day.

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

As we can see, a large seller pushes his order a little higher and higher every day but quickly rebuffs buyers as soon as the price goes beyond the level of 1.3935. Thus, we can assume that the players are gaining short positions before tomorrow's meeting. Now the task of the bears is to protect the new resistance of 1.3951, and we need strong data on the American economy. The formation of a false breakdown forms a signal to open short positions to reduce the pair to the support of 1.3902, for which a real active struggle will unfold. A breakdown of this level and a test from the bottom up will hit the bulls' stop orders and push the pound to the next support of 1.3846, where it is worth thinking about profit-taking. The longer-term target remains the area of 1.3807. However, this is only after tomorrow's speech by the governor of the Bank of England, who should disappoint investors with his passive behavior. In the absence of active sellers in the area of 1.3951, I advise you to postpone sales until the next major resistance of 1.3980 or open short positions on GBP/USD immediately for a rebound from 1.4019, counting on a downward correction of 25-30 points within the day.

The COT reports (Commitment of Traders) for July 27 recorded a reduction in long positions. However, sellers also did not insist and partially reduced their volume of positions. The growth of the pound throughout the week allowed the GBPUSD pair to return to monthly highs. However, it was not possible to gain a foothold higher. The panic after lifting all quarantine restrictions in the UK has receded, and now the main focus this week will be placed at the meeting of the Bank of England on monetary policy. The European Central Bank and the Federal Reserve System did not change anything. Most likely, the Bank of England will also do the same. Before abandoning the stimulus measures, the Bank of England committee members will surely wait for accurate data on how things are going on in the labor market. It is expected that a large-scale government program to support the labor market will be completed as early as September of this year. It may force the regulator to take a longer wait-and-see position since the central bank is not experiencing any special problems with inflationary pressure yet. If the Bank of England representatives start talking more about plans to reduce the bond purchase program, this will provide significant support to the pound. I advise you to stick to the strategy of buying the pair with each significant decrease in it, as the big players do. The COT report indicates that long non-commercial positions decreased from 44,223 to the level of 41,194.

In contrast, short non-commercial positions decreased from the level of 47,720 to the level of 46,878, indicating a cautious approach to sales at current highs. As a result, the non-commercial net position remained negative and amounted to -5,684 against -3,496 a week earlier. The closing price of last week jumped from the level of 1.3668 to 1.3826.

Moving averages

Trading is conducted just above the 30 and 50 daILy averages, indicating the bulls' attempt to intercept the market.

Note: The author considers the period and prices of moving averages 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 case of a decline in the pair, the average border of the indicator in the area of 1.3902 will provide support.

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 specific 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.