To open long positions for GBP/USD, it is required:
Pound purchases continued after the British Cabinet approved the Brexit agreement yesterday, which will now be passed to Parliament for final approval. A break in the resistance at 1.3040 will lead to a larger upward wave on the pound, with the test of the highs at 1.3040 and 1.3163, where I recommend taking profits. In case the pound declines after the release of data on retail sales in the UK, which are expected today, we can consider new long positions on a false breakout of support 1.2962 or on a rebound from yesterday's low of 1.2891.
To open short positions for GBP/USD, it is required:
Weak data on retail sales in the UK can significantly limit the upward potential of the pound and return sellers to the market. An unsuccessful consolidation above the resistance of 1.3040 will be a signal to open short positions in order to reduce to the area of the first support of 1.2962, the breakdown of which will lead to a larger sell-off of the GBP/USD with a minimum test of 1.2891, where I recommend taking profit. If the data is better than expected, a break of 1.3040 will lead to an increase in the pound. In this scenario, it is best to open short positions by rebounding from the high of 1.3099 and 1.3163.
Indicator signals:
Moving averages
Trading is above the moving averages, which indicates the continuation of the upward correction of the pound.
Bollinger Bands
The upper limit of the Bollinger Bands indicator, located around 1.3040, can limit the upward potential in the pound, so that the test can see the sales. The breakdown of this range will lead to a sharp increase in the pound. In case the pound declines, the lower limit of the indicator in the area of 1.2930 will be a good level for purchases.
Indicator description
- Moving Average (average sliding) 50 days - yellow
- Moving Average (average sliding) 30 days - green
- MACD: fast EMA 12, slow EMA 26, SMA 9
- Bollinger Bands 20
