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

Yesterday, a statement by British Prime Minister Boris Johnson and his proposed £5 billion aid plan supported the pound, but this does not eliminate the problems with Brexit and most likely the growth will be temporary. Two signals were formed to buy the pound yesterday, and one to sell. Let's analyze them in more detail. If you look at the 5-minute chart and remember my review for the afternoon, you will see how the bulls formed a false breakout of support at 1.2256, which is where the pair's first rapid growth occurred. The second buy signal was a break and consolidation above the resistance of 1.2321. But I recommended selling the pound only for a rebound from resistance of 1.2386, the test of which led to a slight downward movement of the pound to close the day. Currently, the buyers' task is to return the pair to resistance 1.2386, which will be a clear signal for the GBP/USD pair to grow to a high of 1.2451 in the short term. Good data on manufacturing activity in the UK is likely to lead to another wave of growth in the pair with the entry into a new area of 1.2528, where I recommend taking profits. Pressure on the pound could increase in case bulls are not active in the region of 1.2386. Therefore, when the pair decreases, it is best to wait until a false breakout forms in the support area of 1.2321 and buy from there. Moreover, there are moving averages. I recommend doing long positions immediately for a rebound from weekly lows in the area of 1.2256, counting on a correction of 30-40 points by the end of the day. Let me remind you that the Commitment of Traders (COT) reports for June 23 recorded another growth in short positions, which reflects the market situation. Short non-commercial positions increased from 45.376 to 48,170 during the week. At that time, long non-commercial positions increased from 29,379 to 29,654. As a result, the non-commercial net position increased its negative value and reached -18 516, versus -15,998, which indicates preserving pressure in the market after an unsuccessful attempt by the bulls to reverse the downward trend.

Exchange Rates 01.07.2020 analysis

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

Pound sellers should not postpone their return to the market, since yesterday's attempt at a reversal could turn out to be very bad for them by the end of the week. A false breakout of the level of 1.2386 this morning on the data on manufacturing activity in the UK will be a good signal to open short positions while expecting a return to support 1.2321. However, consolidating below this level will return the bearish momentum to the market, which will lead to the renewal and a breakout of the week's low at 1.2256, which opens a direct path to the area of 1.2185, where I recommend taking profits. If the bulls continue to push GBP/USD, then it is best to count on short positions after updating the high at 1.2451, or sell the pound immediately on the rebound from resistance 1.2528, counting on a correction of 30-40 points within the day.

Exchange Rates 01.07.2020 analysis

Signals of indicators:

Moving averages

Trading is above 30 and 50 moving averages, which indicates another attempt by the bulls to return to the market.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger bands

Pound growth will be limited by the upper level of the indicator at 1.2451. Pressure on the pound will be kept in the area of the lower border of the indicator 1.2260.

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-commercial traders are speculators, 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.
  • The total non-commercial net position is the difference between short and long positions of non-commercial traders.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

Performed by Ruben Watson,
Analytical expert
InstaForex Group © 2007-2020
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