To open long positions on GBPUSD, you need:
In the first half of the day, several signals were formed to enter the market, however, not all of them brought profit. Amid the lack of news on Brexit, many investors are losing their nerve, and the increase in the number of coronavirus infections is putting even more pressure. If you look at the 5-minute chart, you will see how the bulls managed to get to the level of 1.2997 in the first half of the day and tested it from top to bottom, forming a fairly good signal to buy the pound. The growth from this level was no more than 15 points, after which the bears tried to take control and formed a new entry point into short positions, which also turned out to be incorrect. It was only after the GBP/USD returned to the level of 1.2997 that the pressure on the pair returned.
At the moment, there is no point in reviewing the technical picture of the pair, since it has not changed much. The lack of news on Brexit seems to be weighing on both buyers and sellers. Buyers have a chance for a market reversal, and for this, they need to prevent a breakout of the support of 1.2919. The formation of a false breakout on it will be the first signal to open long positions. If there is no activity there, I recommend postponing purchases until the minimum of 1.2865 is updated, from where you can open long positions immediately for a rebound based on a correction of 20-30 points within the day. However, it will be possible to talk about a more likely recovery of the pound and a change in the trend only after the pair fixes above the resistance of 1.2991, the test of which on the reverse side forms a new entry point into purchases to update the highs of 1.3058 and 1.3120, where I recommend fixing the profits.
To open short positions on GBPUSD, you need to:
Bears are now aimed at reducing the GBP/USD to the support area of 1.2919, and while trading is conducted in the middle of the channel, there will be no reference points for entering short positions. Only an upward correction and the formation of a false breakout in the resistance area of 1.2991 will be a signal to sell the pound in the continuation of the current trend. Negative news on Brexit may increase pressure on the pair, which will lead to a breakout and consolidation below the support of 1.2919. In this case, the weekly target will be at least 1.2865. In the scenario of growth of GBP/USD above the resistance of 1.2997 in the second half of the day, I recommend postponing sales until the test of the maximum of 1.3072 in the expectation of a correction of 20-30 points.
Let me remind you that in the COT reports (Commitment of Traders) for October 20, there was a reduction in short and a sharp increase in long positions. Long non-commercial positions increased from 36,195 to 39,836. At the same time, short non-commercial positions fell from 45,997 to 41,836. As a result, the negative value of the non-commercial net position increased slightly to -2,000 against -9,802 a week earlier, which indicates that sellers of the British pound remain in control and have a minimal advantage in the current situation.
Signals of indicators:
Trading is below 30 and 50 daily averages, which indicates a resumption of the bear 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 classic daily moving averages on the daily chart D1.
In the case of an upward correction, the average border of the indicator around 1.32991 will act as a resistance, from which you can sell the pound.
Description of indicators