To open long positions in GBP/USD, you need:

Yesterday we managed to wait for the only signal to sell the British pound in the afternoon, which did not bring much profit, since the downward movement was already a residual. However, let's take a look at the deal. On the 5 minute chart, you can see a breakout of support at 1.3178 in the afternoon, and then the pair returned to this area as well as a test, which formed a good entry point into short positions. As for the current technical picture and affairs in the futures market, there is good news for buyers of the pound. Despite the UK's hard stance on the Brexit trade deal, the pair's recent decline has made the British pound attractive again and traders have started to return to the market.

The Commitment of Traders (COT) reports for September 1 showed an increase in both long and short positions, but there were more buyers. Short non-commercial positions increased from 39,790 to 42,901 over the week. Long non-commercial positions rose from 45,390 to 49,213. As a result, the non-commercial net position also slightly increased and remained in positive territory, reaching 6,312 against 5,600.

As for the current technical picture, bears still have control, and hard Brexit does not allow buyers to find the pair's bottom low. At the moment, bulls need to defend support at 1.3115, a false breakdown on it will be a signal to open long positions against the downward trend. A larger support level is seen at the low of 1.3063 from where you can buy GBP/USD immediately on a rebound, counting on a correction of 30-40 points within the day. An equally important task for buyers is to return resistance at 1.3178, slightly above which the moving averages pass, playing on the side of the pound sellers. Consolidating on this range will lead to a larger upward correction towards the high of 1.3250, which is where I recommend taking profits. The high of 1.3315 will be the long term target, which will mean a reversal of the bearish market.

To open short positions on GBP/USD, you need:

Sellers will do their best to achieve a breakout and settle below support at 1.3115, which will form a good entry point to the market and open a direct path to the low of 1.3063, where I recommend taking profits. Support at 1.3007 will be the long term goal, but it will only be possible to reach it if trade talks between the UK and the EU intensify, on which there is no progress anyway. A more optimal scenario for selling the pound would be an upward correction to the resistance area of 1.3178, where a false breakout will become a signal to open short positions in hopes to continue the bearish trend. In case bears are not active at this level, I recommend postponing sell positions for a rebound from the 1.3250 high, counting on a 30-40 point correction within the day.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates a continuation of the bearish 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 D1 daily chart.

Bollinger Bands

A breakout of the lower border of the indicator in the 1.3135 area will lead to a new wave of the fall for the British pound. A breakout of the upper border in the 1.3180 area will lead to an upward correction of the pair.

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) Fast 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 the short and long positions of non-commercial traders.