To open long positions on GBP/USD, you need:
Yesterday morning, sellers of the pound showed themselves quite well, but then buyers took control, who managed to return the pound to the area of the day's opening level. Let's look at the 5-minute chart and analyze the deals: in the first half of the day, I advised you to sell the pound once it settles below the 1.3844 level, which happened. You can clearly see how after the pound surpasses support at 1.3844, it is tested from the bottom up, which creates an excellent entry point for short positions. Unfortunately, we did not reach the main target in the 1.3783 area, and after falling by 35 points, the market reversed. The bulls were quite active during Prime Minister Boris Johnson's speech and this quickly led to a breakthrough of 1.3844, but I did not wait for a reverse test of this level. As a result: I was forced to miss all the gains during the US session. Small sales at the end of the day from the resistance of 1.3903 made it possible to take another 10 points from the market.
Today everything will be tied to the Federal Reserve's decision on monetary policy. The absence of important fundamental statistics on the UK can push the pound in a horizontal channel in the first half of the day. Most likely, Powell will not make any changes to the central bank's policy, which may lead to another rise in bond yields and a renewed trend towards strengthening the dollar against the British pound. For the pair to grow and the downward trend to reverse, the bulls need to rise above resistance at 1.3903, where the upper border of the current downtrend channel from March 12 passes. Being able to settle above this level and testing it from top to bottom creates a point of entry for long positions, in hopes that the pair will recover to resistance at 1.3950, and then return to a high like 1.4000, where I recommend taking profits. In case the pound falls in the first half of the day, then I recommend not to rush into long positions, but to wait until support at 1.3844 has been tested, where you can open longs immediately on a rebound, counting on a recovery of 20-25 points within the day. In case traders are not active in the 1.3844 area and the pound rapidly moves up, then the optimal scenario under this condition is to buy GBP/USD to rebound off the next support at 1.3783, counting on the same upward correction of 30-35 points within the day.
To open short positions on GBP/USD, you need:
The initial task of the bears is to maintain control over resistance at 1.3903. Forming a false breakout there in the first half of the day creates a new entry point for opening short positions in order to continue the pair's downward correction. In this case, the bears will aim for support at 1.3844, where I recommend taking profits. The lack of fundamental reports may help the bears, but an equally important goal is a breakthrough and test the 1.3844 level from the bottom up, which will create an additional entry point into short positions so it can return to a low like 1.3783, where the lower border of the current descending channel is. Updating the previous day's low is very important for the bears. If they are not active in the 1.3903 resistance area, then it is best not to rush to sell: you can open short positions immediately on a rebound only from the 1.3950 high, counting on a downward correction of 30-35 points within the day. The next major resistance area is seen around 1.4000.
The Commitment of Traders (COT) report for March 9 revealed a reduction in both short and long commercial positions. This time, the closing of long positions became quite strong, which led to a reduction in the positive delta. The main problem for risky assets, which can be attributed to the pound, is still the growth in the yield of US bonds, which provides serious support to the US dollar. However, in the medium term, buyers of the pound will certainly take advantage of this moment to enter the market at more attractive prices. The beginning of quarantine measures in March will continue to provide the main support for the pound, as well as new measures to help the UK population in the fight against the coronavirus pandemic. Long non-commercial positions declined from 65,138 to 61,271. At the same time, short non-commercials declined from 29,056 to 27,360, indicating a succeeding decline for the pair. As a result, the non-commercial net position fell to 33,911 from 36,082 a week earlier. The weekly closing price dropped to 1.3821 against 1.3928. The observed downward correction in the pound will attract new buyers.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates an attempt by pound bulls to seize the initiative.
Note: The period and prices of moving averages are considered by the author on the H1 chart and differs from the general definition of the classic daily moving averages on the D1 daily chart.
Bollinger Bands
Growth will be limited by the upper level of the indicator in the 1.3920 area. The fall of the pound is limited by the lower level of the indicator in the area of 1.3844.
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.
