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

The pound remains under pressure, which is confirmed by the lack of reaction to a good report on GDP growth rates after the coronavirus pandemic. The report on a smaller contraction of the UK economy in the second quarter of this year also did not return buyers of the pound to the market. Most likely, the pressure on the pair will continue. The Commitment of Traders (COT) reports for August 4 recorded significant changes, as traders began to regain long positions on the pound and reduce short positions. This suggests that the balance of power is gradually changing again, and investors are more confident that the UK and the EU will be able to agree on a trade deal that will help the economy recover in 2021. The COT report indicated that short non-commercial positions fell from the level of 64,738 to the level of 60,704 during the week. On the contrary, long non-commercial positions rose from the level of 39,392 to the level of 45,977. As a result, the non-commercial net position again decreased its negative value to 14,727 against -25,409, indicating a slower fall in the pound after the US dollar regained strength. However, you need to understand that as long as the Delta is negative, the pressure on the pound will remain quite high.

As for the current situation, it is very important for the bulls to protect the 1.3020 support, on which a lot depends. Forming the next false breakout on it will be a signal to open long positions in the pair in anticipation of a recovery to the middle of the 1.3105 channel, where I recommend taking profits. The long-term target for the bulls is still this month's high of 1.3181. If the pressure on the pound returns, and we see buyers not reacting to the UK GDP data, it is best to postpone long positions to test the low of 1.2911, or buy GBP/USD immediately on the rebound from the more powerful support of 1.2839 based on a correction of 30-40 points within the day.

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

Sellers need to break below the support of 1.3020, since consolidating below this level will be a good signal for opening short positions in anticipation of pulling down the pair to a low of 1.2911, where I recommend taking profits. If the US inflation data comes out much better than economists' forecasts, we can expect the pound to fall to a low of 1.2839. In case the pair recovers in the morning, and for good reason, in the form of a pretty good report on the growth of the UK economy after the pandemic coronavirus, it is better not to hurry with the sales and wait for a false breakout to form near the resistance of 1.3105. Sell GBP/USD immediately on the rebound, I recommend doing so only from this month's high in the area of 1.3181, counting on a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates the possibility of a further decline in the pair.

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 classic daily moving averages on the daily D1 chart.

Bollinger Bands

Growth will be limited by the upper level of the indicator in the 1.3110 area. A breakout of the lower border of the indicator around 1.3000 will increase the pressure on 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.
• The MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages). Fast EMA period 12. Slow EMA period to 26. The 9 period SMA.
• Bollinger Bands (Bollinger Bands). The 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.
• The total non-commercial net position is the difference between short and long positions of non-commercial traders.