To open long positions on GBP/USD, you need:
Yesterday, 4 intraday signals to enter the market appeared at once. Let's take a look at the 5-minute chart and analyze the trades where you can and should enter the market. In my forecast for the first half of the day, I drew attention to the 1.3658 level and recommended opening positions from it, subject to a number of conditions. A breakout and being able to settle above 1.3658, followed by a downward test of this level, led to creating an excellent signal to enter the market. As a result of this entry, we managed to take around 40 points of profit, since the target in the area of the annual high of 1.3701 was reached very quickly. The pound was supported by good inflation reports. Closer to the middle of the day, in my forecast for the US session, I drew attention to forming a false breakout in the resistance area of 1.3701, where a signal to sell the pound was created and so I advised you to open short positions. As a result, the pair returned to the support area of 1.3658, which brought about 35 more points. The bulls' desperate attempts to protect this area did not lead to anything significant, but a breakout and being able to test the 1.3658 level from the bottom up in the afternoon, created another signal to sell GBP/USD, as a result of which the pair fell by another 35 points.
Now pound buyers are focused on protecting support at 1.3669, since the pair's succeeding direction depends on it. Forming a false breakout there in the first half of the day will make it possible for us to expect that the pound could rise to an annual high of 1.3716, where I recommend taking profit. A breakout of 1.3716 and being able to test this area from top to bottom will hit a series of buy stop orders and lead to a new powerful bullish momentum with an exit to the highs of 1.3750 and 1.3803, where I also recommend taking profits. If the bulls cannot protect support at 1.3669 in the first half of the day, and the downward correction for the pound intensifies, then it is best not to rush into buying, but wait for an update of support at 1.3624, from which a new wave of growth was formed yesterday. However, I recommend buying the pound from there only when a false breakout is formed. If bulls are not active at this level, I recommend postponing long positions until the test of the low of 1.3585, where you can open longs immediately on a rebound, counting on an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
Bears will do their best to regain control of the 1.3669 level, but after settling below this range and testing it from the bottom up, similar to the sell signals that appeared yesterday which I analyzed, one can count on bringing back the downward correction and returning to the 1.3624 area. We can talk about a more powerful bearish momentum when sellers have finally surpassed this range, which will open GBP/USD a direct road to the lows of 1.3585 and 1.3531, where I recommend taking profits. In case the pair grows further, one should be very careful with short positions. Forming a false breakout in the resistance of 1.3716 creates a signal to open short positions. I recommend selling GBP/USD immediately on a rebound from a high of 1.3750, counting on a slight correction of 20-25 points within the day.
The Commitment of Traders (COT) report for January 12 recorded an increase in both long and short positions, but there were more of the first ones, which caused the delta to increase. Long non-commercial positions increased from 35,526 to 47,935. At the same time, short non-commercial positions increased from 31,861 to 34,993. We can see that sellers turned out to be much less than new buyers. As a result, the non-commercial net position rose to 12,942 against 3,665 a week earlier. All this suggests that traders continue to bet on the strengthening of the pound, even in the face of the new Covid-19 strain, for which there is no vaccine yet. The demand for the pound is limited by quarantine measures in the UK, which will sooner or later be canceled after the infection situation stabilizes. The Bank of England's recent refusal to introduce negative interest rates and the pound's decline earlier this year have brought many large medium-term buyers back into the market, expecting a continuation of the bull market this spring.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates the pair's succeeding growth.
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 in the 1.3705 area will lead to a new wave of growth. In the event of a decline, support will be provided by the lower border of the indicator at 1.3624.
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.
- Non-commercial short 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.
