To open long positions on GBP/USD, you need:
Last Friday, no signals were generated to enter the market, since throughout the entire period none of my levels were tested. The 5-minute chart clearly shows how in the first half of the day the pair was walking around the resistance at 1.3933 for a long time, but it never came to a test. The collapse of the pound during the US session led to the renewal of the low of 1.3880, but there it was not possible to get a signal to enter the market, since everything happened at the end of the US session.
Today, there are no important fundamental statistics, so the whole emphasis will be placed on the speech of the chief economist of the Bank of England Andy Haldane, who in his speech will express his vision of the situation with inflation and interest rates, which may lead to the strengthening of the pound in the morning. The main task is a breakthrough and consolidate above the resistance at 1.3926. A reverse test of this level from top to bottom will generate a buy signal and open a direct road to the 1.3978 area, where I recommend taking profits. The further target will be the high of 1.4019, the test of which will completely cancel out the bear market observed at the end of last week. If the pressure on the pound persists in the first half of the day, and we see a decline in the pair to the 1.3872 area, then only the formation of a false breakout at this level will generate a signal to open long positions in the continuation of the growth of the pound. In the absence of buying activity in the 1.3872 area and a further fall in GBP / USD, it is best to postpone long positions until the 1.3831 low is renewed. It is also possible to buy the pair immediately on a rebound from the level of 1.3787 with the aim of an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears' initial task is to protect the resistance at 1.3926, which was formed at the end of last week. Forming a false breakout there will be a signal to sell the pound, which will push the pair back to the support of 1.3872, which will have to be fought for very seriously. An equally important task for the bears is a breakthrough and a reverse test of this level from the bottom up, which will lead to forming another entry point into short positions and allow GBP/USD to reach lows like 1.3831 and 1.3787, where I recommend taking profits. The absence of important fundamental statistics this morning may help with the implementation of such a scenario. If the bears are not active in the resistance area of 1.3926, the moving averages, playing on the side of the bears, also pass there, I recommend postponing sales until the test of the high 1.3978, or even higher - to the level of 1.4019, where 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 June 15 showed that both long and short positions sharply decreased, however, this did not negatively affect the positive delta, but, on the contrary, even increased it due to a larger reduction in the bears' positions. The data was collected even before the Federal Reserve announced its decision on monetary policy, so I recommend not paying special attention to them, since at the moment the picture is already of a different nature. Good inflation in the UK will continue to create a certain pressure on the Bank of England, but so far there is no reason for panic, as is the case in the US, for the British central bank. This week, the central bank will hold a meeting, where most likely everything will remain unchanged, which may lead to continued pressure on the British pound and it may continue to fall against the US dollar in the short term. Similar statements from representatives of the Bank of England no longer work, so the market will only react to new guidelines for monetary policy, if any. Another important moment for the pound would be the full opening of the UK economy, which is slated for the 20th of this month. The spread of the Indian strain of the coronavirus in the territory creates a number of obstacles to this, which affects the desire of investors to buy the British pound. The best scenario is buying for every good decline in the British pound against the US dollar. The COT report showed that long non-commercial positions fell from 59,238 to 55,203, while short non-commercial positions significantly fell from 31,524 to 23,033. As a result, the non-commercial net position rose from 27,714 to 32,170. Last week's closing price significantly changed and reached 1.4109 against 1.4175.
Indicator signals:
Trading is carried out below 30 and 50 moving averages, which indicates a continued bear market.
Moving averages
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
Surpassing the upper border of the indicator in the area of 1.3900 will lead to a new wave of growth of the pound. A breakthrough of the lower border of the indicator around 1.3872 will increase the pressure on 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) 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.
