To open long positions on GBP/USD, you need:
In the first half of the day, the volatility of the GBP/USD pair was excessively low. Let's look at the 5-minute chart and figure out what happened. The inarticulate attempt of the bears to break below 1.3192 led only to a signal for the formation of long positions, but it did not come to major growth. From a technical point of view, everything remained unchanged, as well as the scenario for decision-making.
There are no important fundamental statistics in the afternoon, and data on the American economy is unlikely to significantly affect the pair. Although strong indicators on the reduction of initial applications for unemployment benefits may lead to a repeated ramming of the 1.3192 level by the bears. The bulls will have to once again gather all the will into a fist. Only in the case of the formation of a false breakdown in the area of the lower border of the side channel 1.3192, by analogy with what I discussed above, you can open long positions. Only then can we count on the growth of the pound and the test of the middle of the side channel 1.3237, just below which the moving averages that play on the sellers' side also pass. Going beyond this level will be a very strong bullish impulse, so the 1.3237 test from top to bottom will give an additional entry point to buy GBP/USD with the prospect of a breakout of 1.3283 closer to the middle of the American session. A breakdown of this range will also open up an opportunity to update the maximum of 1.3329, where I recommend fixing the profits. The resistance of 1.3368 remains a longer-range target, but it will be quite difficult to reach it without good news. Under the scenario of another decline in the pound during the US session and the lack of activity at 1.3192, buyers will have very serious problems. For this reason, I advise you not to rush shopping. Only the formation of a false breakdown near the minimum of 1.3150 will give an entry point into the long positions. You can buy GBP/USD immediately for a rebound in the area of 1.3111, or even lower - from 1.3070, counting on a correction of 20-25 points within a day.
To open short positions on GBP/USD, you need:
Sellers of the British pound coped with the task perfectly and tried to break below 1.3192, but somehow without much enthusiasm, which forced speculative players to quickly retreat from this level. All that is required from the bears now is the protection of 1.3237, which plays a great role for them. The formation of a false breakdown there will lead to the formation of a new entry point into short positions, followed by a decline in the pair to the area of 1.3192. Given that only weekly data on the American labor market is being released today, it is not particularly necessary to count on them. However, a breakdown of 1.3192 during the publication of the report will create additional problems for buyers and keep the pair in a downtrend. A reverse test of this range from the bottom up will give an excellent entry point, which will push GBP/USD to new lows: 1.3150 and 1.3111, where I recommend fixing the profits. A more distant goal will be the support of 1.3070, but we will fail to it if the Bank of England maintains an ultra-soft monetary policy. If the pair grows during the American session and sellers are weak at 1.3237, it is best to postpone sales to a larger resistance of 1.3283. I also advise you to open short positions there only in case of a false breakdown. It is possible to sell GBP/USD immediately for a rebound only from a large resistance of 1.3329, or even higher - from a new maximum in the area of 1.3368, counting on the pair's rebound down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for November 30 recorded an increase in both short positions and long positions. However, there were more of the latter, which led to an increase in the negative delta. There were very few fundamental statistics on the UK economy last week, and all the speeches of the Governor of the Bank of England, Andrew Bailey, were dovish, which did not give confidence to traders in the future of the British pound. And if the representatives of the Bank of England preferred to take a more wait-and-see attitude, then the speeches of the Chairman of the Federal Reserve System Jerome Powell, on the contrary, were hawkish. In his comments, he talked a lot about the expected changes in monetary policy towards its tightening. The reason for this is rather high inflation, which has grown from "temporary" to permanent, which creates many problems for the central bank. An equally serious problem for the UK is a new strain of the omicron coronavirus, which can lead to another lockdown and the closure of the country for quarantine. So far, the authorities have to closely monitor the development of the situation with the new strain, which negatively affects the economy at the end of this year. Let me remind you that next week we will have a meeting of the Federal Reserve System, at which a decision will be made on the bond purchase program. Therefore, demand for the US dollar is expected to remain in the shorter term. The COT report indicates that long non-profit positions increased from the level of 50,122 to the level of 52,099, while short non-profit positions increased from the level of 84,701 to the level of 90,998. This led to an increase in the negative non-commercial net position: the delta was -38,899 against -34,579 a week earlier. The weekly closing price decreased from 1.3397 to 1.3314.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily moving averages, which indicates an attempt by bears to return to the market.
Note: The period and prices of moving averages are considered by the author 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 breakthrough of the lower limit of the indicator in the area of 1.3190 will lead to a new wave of decline in the pound. In the case of growth, the upper limit of the indicator around 1.3237 will act as resistance.
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 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 the short and long positions of non-commercial traders.
