FX.co ★ GBP/USD: plan for the European session on March 3. COT reports. The pound continues to climb up and aims to surpass the 34th figure

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

Yesterday, several excellent signals were formed to enter the market. Let's take a look at the 5-minute chart and figure out what happened. In my morning forecast, I paid attention to the 1.3270 level and advised you to make decisions on entering the market. A quick breakthrough of 1.3303 without a reverse test from the bottom up did not result in forming a sell signal for the pound. However, long positions in the area of 1.3270 on a false breakout were very well traced. This pushed the pound to rise back to 1.3303, which made it possible for us to withdraw about 30 points from the market. Several unsuccessful attempts to get above 1.3303 and a sell signal - the drop was 25 points. On the second attempt, the bulls took 1.3303 and gained a foothold higher, which resulted in creating a good entry point into long positions. As a result, the pair grew by another 35 points. We observed a breakthrough and consolidation above 1.3336 in the afternoon, but the growth from this level took place only after Federal Reserve Chairman Jerome Powell's speech, and before that the pair normally plunged, which led to taking losses.

Yesterday it became known that Powell supported an interest rate hike by a quarter point this month, which will take place at the committee's next meeting. This led to active long positions on the pound, as bulls on the US dollar were disappointed by the lack of aggression that was observed in the statements made by the manager earlier. Powell did not rule out more aggressive actions in the future, despite the uncertainty caused by Russia's military actions on the territory of Ukraine and the problems that the world economy may face. A number of reports on the activity of the PMI index for the UK services sector will be released this morning, which may provide good support to bullish sentiment and bulls on the pound. A composite PMI will also be released, which will allow the pair to cross the area above the 34th figure.

It is important to protect the support of 1.3350 during the European session, formed by yesterday's results. There are also moving averages that are already playing on the bulls' side. You can consider long positions from this level after forming a false breakout there, since the entry will still be carried out against the bear market. The pound's growth in this scenario will lead to a resistance of 1.3394. Only a breakthrough and a reverse test of this area from top to bottom will demolish a number of bears' stop orders, which will make it possible to restore positions more actively. The target in this case will be the 1.3435 area. A more difficult task is to update the resistance at 1.3468, where I recommend taking profits. In case GBP/USD falls during the European session and the bulls are not active at 1.3350, you should not despair. You can postpone long positions until the nearest support in the area of 1.3314, from where we observed major players being active yesterday. But even there, I advise you to open long positions only when a false breakout is formed. You can buy GBP/USD immediately on a rebound from 1.3270, or even lower - from a low like 1.3232, counting on a correction of 20-25 points within the day.

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

Bears no longer control the market, and Powell's statements from yesterday, along with the news about the upcoming next meeting of representatives of Russia and Ukraine, may even lead to a more powerful bullish momentum. Therefore, you need to be very careful with short positions. For today, it is important for bears to aim for support at 1.3350, but you also need to think about protecting 1.3394. Forming a false breakout at 1.3394, together with weak data on activity in the UK services sector, will lead to the first signal to sell the pound with the prospect of a return to 1.3350. A breakthrough and a reverse test of this range will increase the pressure on the pair, which will provide another entry point into short positions, already counting on a fall to a low like 1.3314, crossing the area below which will be even more difficult. Only the aggravation of the geopolitical situation will open the way to 1.3270 and 1.3232, where I recommend taking profits. In case GBP/USD grows during the European session and the bears are not active at 1.3394, it is best to postpone short positions to a larger level of 1.3435. I also advise you to open short positions there in case of a false breakout. It is possible to sell GBP/USD immediately for a rebound from 1.3468 or even higher - from a high like 1.3510, counting on a correction of the pair down by 20-25 points within the day.

I recommend for review:

The Commitment of Traders (COT) reports for February 22 showed a sharp increase in short positions and a reduction in long ones. This again led to the return of the negative value of the delta - the market continues to maintain equilibrium even in the conditions of military operations. In the context of a tough geopolitical conflict that has affected almost the entire world, it is not surprising that short positions on risky assets are only beginning to increase. This report has not yet affected the sell-off that was observed at the end of last week, so it's too early to talk about real figures. It makes no sense to talk about what the Bank of England or the Federal Reserve's policy will be, since in the event of an aggravation of the military conflict, it will not matter at all. Now Russia and Ukraine have sat down at the negotiating table, and much will depend on the results of these meetings – there will be a lot of them. In the current conditions, it will not be too correct to consider the COT report, especially considering its secondary information for the trader. I advise you to be quite careful about risky assets and buy the pound only as the tense relations between Russia, Ukraine, the EU and the US weaken. Any new sanctions actions against Russia will have serious economic consequences, which will affect the financial markets. The COT report for February 22 indicated that long non-commercial positions decreased from the level of 50,151 to the level of 42,249, while short non-commercial positions increased from the level of 47,914 to the level of 48,058. This led to the formation of a negative value of the non-commercial net position from the level of 2,247 to the level of -5,809. The weekly closing price rose to 1.3592 against 1.3532.

Indicator signals:

Trading is conducted in the area of 30 and 50 moving averages, which indicates an attempt by bulls to take over the market.

Moving averages

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 falls, the lower limit of the indicator in the area of 1.3314 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 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.