To open long positions on GBP/USD, you need:
The last-minute trade deal between the EU and the UK did not have much of an impact on the pound as everyone expected. Two signals to enter the market appeared on Thursday. Let's take a look at the 5-minute chart and break it down. A breakout and being able to settle above the 1.3566 level, followed by its test from top to bottom, created a good signal to open long positions as the pound continues to rise. This was especially true at a time when everyone was waiting for an agreement to be reached. The growth took place in the resistance area of 1.3623, where I recommended taking profit. It was possible to make short positions from this level immediately on a rebound, but in fairness, it is worth saying that I missed this trade, since there was no desire to sell against the background of a trade transaction, and a false breakout was created to enter against the upward trend, I also did not wait for it.
Buyers are currently focused on resistance at 1.3623. A breakout and being able to settle at this level while testing it from top to bottom creates a good entry point into sustaining the bull market. In this case, we can expect the pair to rise to a high of 1.3690 and its update, with an exit to the 1.3750 area, where I recommend taking profits. If the pound is under pressure this morning, it is best to open long positions after forming a false breakout in the support area of 1.3540, where the moving averages are, playing on the side of the pound buyers. I recommend buying GBP/USD immediately on a rebound from a low of 1.3474, or even lower, from a larger support area of 1.3404, counting on an upward correction of 35-40 points within the day.
To open short positions on GBP/USD, you need:
Given that there is no more optimism associated with the trade, a downward correction in the British pound is quite likely. However, it's best not to rush to sell GBP/USD today. Forming a false breakout in the resistance area of 1.3623 will return pressure to the pair and lead to a downward correction to the support area of 1.3540, on which the pair's succeeding direction depends, which is now in a horizontal channel. Surpassing this level and testing it from the bottom up creates a good signal to open short positions in order to sustain the downward correction while anticipating the pair to fall to lows of 1.3474 and 1.3404, where I recommend taking profits. In case the pound grows further at the beginning of this week, I recommend not rushing to sell. It is best to wait for the renewal of new annual highs around 1.3690 and 1.3750, where you can open short positions for a rebound, counting on a decline of 20-30 points within the day.
There was a decrease in interest in the British pound for both buyers and sellers in the Commitment of Traders (COT) report for December 15. Long non-commercial positions fell from 39,344 to 35,128. At the same time, short non-commercial positions decreased from 33,634 to 31,060. As a result, the non-commercial net position, although it remained positive, dropped to 4,068 against 5,710 a week earlier. Given that the UK has imposed tough quarantine measures due to a new strain of coronavirus that has gotten out of control and for which there is no vaccine yet, counting on the pound to strengthen further at the end of this year will not be the right decision. Good Brexit news will no longer be able to push the pair higher.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates the sideways nature of the market in the short term.
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
A breakout of the upper border of the indicator around 1.3620 will lead to a new wave of growth in the pound. A breakout of the lower boundary at 1.3510 will increase pressure on the pair.
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.
