To open long positions on GBP/USD, you need:
Nothing has changed from a technical point of view. Bears tried to break through below the middle of the channel yesterday and even formed an entry point into short positions from there, but this did not lead to a larger sell-off. And then the bulls took the initiative, also forming a good signal to buy the pound. Let's look at it in more detail. If you look at the 5-minute chart, you will see how the breakout of the 1.2701 support and its test from the bottom up became a good point for opening short positions. However, the downward movement was no more than 30 points, and the dollar began to lose ground after weak reports on the US labor market were released. Only then, the bulls regained the area of 1.2701, and its top-down test formed a good entry point into long positions in the expectation of continuing the bull market. This signal caused the pound to return to the area of weekly highs, where trading stopped. At the moment, the pair is stuck in a side channel and the further direction of the market will depend on which way the breakout will occur. The bulls need to protect the support of 1.2701 and forming a false breakout at this level will be a signal for you to open long positions to continue the current bull market. An equally important goal is a breakout and consolidating above this week's high of 1.2763, which also forms a signal to buy the pound with continued growth in the area of 1.2809 and 1.2906, where I recommend taking profits. Data on retail sales volume, which is released today in the morning, can help buyers of the pound. If there is no activity in the support area of 1.2701, it is best to postpone long positions until the low of 1.2645 has been updated and buy the pound there immediately for a rebound based on a correction of 30-40 points within the day.
Let me remind you that the COT report for July 14 indicated that during the week there was an increase in short non-commercial positions from the level of 56,300 to the level of 56,761. During this time, long non-commercial positions rose from the level of 39,892 to the level of 43,175. As a result, the non-commercial net position decreased its negative value to -13,568, against -16,408, which indicates that the market is still under pressure, but there are fewer and fewer willing to sell.
To open short positions on GBP/USD, you need:
Sellers have a great chance to return to the market, but they need to work hard. First of all, you need to prevent a breakout of the 1.2763 resistance and form a false breakout on it, which will be the first signal to open short positions. The goal of such an entry is support of 1.2701, consolidating below it will only increase the pressure on the pound, which will lead to a complete overlap of yesterday's growth and updating the low of 1.2645, where I recommend taking profits. Support for 1.2585 is still the long-term goal. With the growth of GBP/USD above the resistance of 1.2763 in the first half of the day, you can rely on poor data on the volume of retail trade in the UK, which will have a significant impact on the market. If there are no sellers at the 1.2763 level, I advise you to postpone short positions until the high of 1.2809 has been updated, or sell the pound immediately on the rebound from the resistance of 1.2906, based on a correction of 30-40 points by the end of the day.
Indicator signals:
Moving averages
Trading is conducted in the area of 30 and 50 moving averages, which indicates the lateral nature of the market.
Note: the period and prices of 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
If the pound falls, the lower border of the indicator in the area of 1.2690 will provide support. Breaking the upper limit in the area of 1.2765 will lead to a new wave of growth of the pound.
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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-commercial traders are speculators, 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.
- The total non-commercial net position is the difference between short and long positions of non-commercial traders.
