To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3732 and recommended that you make entry decisions from it. Let's look at the 5-minute chart and figure out what happened. It is visible how the bulls protect the support of 1.3732 and form a false breakout with a signal to open long positions to continue the upward trend. But despite forming a good entry point, buyers are not in a hurry to push the pound to new local highs, which keeps the market volatility relatively low. From a technical point of view, little has changed for the second half of the day. A lot will now depend on the speech of Federal Reserve Chairman Jerome Powell at Jackson Hole. It will be very difficult to predict the pair's direction during Powell's statements, so it is best to navigate already on the spot. As for the technical picture of GBP/USD, the bulls are now at the right time to continue thinking about protecting the level of 1.3732. However, it is possible to open long positions from it only after the next formation of a false breakdown. There are also moving averages that play on the side of the bulls. If the pressure on the pound persists and the bulls do not show anything in the support area of 1.3732 – the optimal scenario will be long positions from the new minimum of 1.3697, but only after forming a false breakdown. You can buy GBP/USD immediately for a rebound in the area of 1.3662, or even lower - from the level of 1.3634 with the aim of an upward correction of 15-20 points within the day. Under the GBP/USD growth scenario in the second half of the day against the background of statements by the Chairman of the Federal Reserve System, the bulls will focus on a breakout and consolidation above the resistance of 1.3765. A test of this level from top to bottom forms a good entry point into long positions intending to reach a new maximum of 1.3801 and with the prospect of updating 1.3841, where I recommend fixing the profits. The longer-term target remains the area of 1.3876, the update of which will cancel all the bear's plans for a return of the downward trend.
To open short positions on GBP/USD, you need:
The initial task of the bears remains to protect the resistance of 1.3765, which was formed today during the Asian session. The optimal scenario for opening short positions will be the formation of a false breakdown at this level, which will weaken the position of the British pound and push the pair to the support of 1.3732, below which the moving averages pass, clearly hindering further downward correction. While the bears are stuck to the level of 1.3732 and trading is conducted exactly around this range, you can count on a breakthrough and a test of this area from the bottom up, which will form an additional entry point into short positions and push GBP/USD even lower (1.3697). You can reach the minimum of 1.3662, where I recommend fixing the profits. In the event of a sharp rise in the pound and the absence of active sellers around 1.3765 after the speech of the Chairman of the Federal Reserve System, I advise you to postpone sales until the next major resistance of 1.3801, which may become a new weekly high. I also recommend opening short positions only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from the local maximum in the area of 1.3841, counting on a downward correction of 25-30 points within the day.
The COT reports (Commitment of Traders) for August 17 recorded a reduction in both short and long positions. The fact that representatives of the Bank of England are in no hurry to talk about changing monetary policy affects the activity of traders. Last week's data on retail sales and inflation in the UK again proved that no one would rush to raise interest rates until the end of 2022, and this is a fairly long time horizon. It put pressure on the British pound. But I have repeatedly noted that the lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the Bank of England in the future. The COT report indicates that long non-commercial positions decreased from the level of 44,750 to the level of 41,898.
In contrast, short non-commercial positions decreased from the level of 37,680 to the level of 37,2474, indicating an almost complete balance in the balance of power. As a result, the non-commercial net position slightly decreased and amounted to 4,651, compared to 7,070 a week earlier. The closing price of last week remained almost unchanged at 1.3840 against 1.3846.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily averages, indicating a downward pair correction in the short term.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A break of the lower limit of the indicator in the area of 1.3732 will increase the pressure on the pair. A break of the upper limit in the area of 1.3770 will lead to a new wave of growth of the pound.
Description of indicators
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
- Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
- MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands (Bollinger Bands). Period 20
- Non-profit speculative traders, such as individual traders, hedge funds, and large institutions that use the futures market for speculative purposes and meet specific 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 the short and long positions of non-commercial traders.
