To open long positions on GBP/USD, you need:
Last Friday, it was rather difficult to determine the entry point at 1.3783, ahead of the release of the fundamental data on the UK GDP. Afterwards, it became a little easier to take action. Let's take a look at the 5-minute chart and see what happened. We can see how the pair touched the 1.3783 level for quite a long time, not making it possible to take a convenient entry point from it. A sharp rise in the pound due to the GDP data caused the pair to settle above 1.3820, from where it was possible to open long positions in sustaining the pound's growth based on a high of 1.3862, which happened. I advise you to open short positions for a rebound on the 1.3862 area, counting on a correction.
Good data on the UK GDP leaves hope for the pound's succeeding growth and further. Therefore, the buyers will initially focus their attention on resistance at 1.3909, which we have come close to during today's Asian session. Being able to break through this range and consolidation on it, along with testing it from top to bottom in the first half of the day creates a good signal to open long positions in sustaining the bull market. This will open a direct road to the highs of 1.3954 and 1.3993, where I recommend taking profits. A more optimal scenario for buying GBP/USD would be a downward correction to the support area of 1.3862, where forming a false breakout creates a new entry point into long positions. If bulls are not active and we see a rapid rally in the pound, then it is best to postpone long positions until a larger low of 1.3820 has been tested, where the lower border of the new rising channel also passes. You can count on a rebound from the 1.3820 level immediately by 20-25 points.
To open short positions on GBP/USD, you need:
The bears' initial task is to stop the current bull market, so they will focus all their attention on resistance at 1.3909, above which it will be quite difficult to break through without a short pause. However, it is very dangerous to open short positions against such a powerful trend. Therefore, the optimal scenario is to form a false breakout in the 1.3909 area, which may lead to a downward correction to the support area of 1.3862. The bears' succeeding direction will be the low of 1.3820, where I recommend taking profits. If bulls do not experience any special problems in the resistance area of 1.3909, then it is best to refuse to sell until the larger highs in the 1.3954 and 1.3990 areas are renewed, from which you can open short positions immediately on a rebound, counting on a downward correction of 20-25 points within the day.
The Commitment of Traders (COT) reports for February 2 revealed an increase in both long and short positions. This time there were more buyers, which led to an increase in the positive delta. The bulls' desperate attempts to surpass annual highs will lead to success sooner or later, so buyers do not lose hope that the bullish trend will continue in February. Each major decline in the pound prompts major players to raise long positions in anticipation of a more active GBP/USD recovery in the future. Long non-commercial positions rose from 47,360 to 53,658. At the same time, short non-commercial positions increased from 39,395 to 44,042, which prevented bears from taking control of the market. As a result of this, the non-commercial net position rose to the level of 9,616 against 7,965 a week earlier. The weekly closing price was 1.3675 against 1.3676. The fact that the bulls held their positions at such a high volatility within the week, once again suggests that the pair is clearly set to overcome annual highs. I recommend betting on the pound's succeeding growth. The demand for the pound will only increase as quarantine measures are lifted, which are expected to be phased out in February this year. The support for the population and the labor market, which will be announced in March, will also have a positive effect on the pound's rate. All the talk about negative interest rates from the Bank of England was postponed indefinitely last week, which allows the pound to spread its wings.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates a resumption of the bull market.
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 of a downward correction, the middle border of the indicator in the 1.3860 area will act as a 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.
