05.03.202108:45 Forex Analysis & Reviews: GBP/USD: plan for the European session on March 5. COT reports. Pound fell against the dollar. Bears aim to break through 1.3860

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

Yesterday there was only one signal to buy the pound in the morning. Let's take a look at the 5-minute chart and break down the entry point. We could clearly see how the first time buyers sought to protect the lower border of the horizontal channel at 1.3919, from which I recommended opening long positions. This area was re-tested, from which the pair quickly rebounded, which is a confirmation for entering long positions on the pound. As a result, the pair managed to reach the target level of 1.3988 before the speech of Federal Reserve Chairman Jerome Powell, which brought more than 70 points of profit. The pound's sharp collapse by the end of the US session did not result in creating a sell signal.

Exchange Rates 05.03.2021 analysis

Important fundamental reports from the UK will not be released today, so by breaking through and being able to settle above resistance at 1.3931, this can create a convenient entry point for long positions and lead to an upward correction for the pair. Testing this level from above will bring back new GBP/USD buyers to the market who aim to return to resistance at 1.3995, where I recommend taking profits. The succeeding target will be the high of 1.4062. In case the pound falls in the first half of the day, then it would be best to wait for a false breakout to form at the support level of 1.3860 and only after that should you open long positions. If buyers are not active in the 1.3860 area, then I recommend postponing long positions until the 1.3775 low has been tested, counting on a rebound of 30-35 points within the day.

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

The initial task of the bears is to form a false breakout in the resistance area of 1.3931, where the moving averages, playing on the side of the sellers, pass. Such a scenario will bring new sellers back to the market, hoping that the pair would fall to the support area of 1.3860. A breakout and being able to test it from the bottom up can create an additional point for entering short positions for the purpose of reaching a low like 1.3775, where I recommend taking profits. A sharper fall below this level will occur in case of a good report on the change in the number of employees in the non-agricultural sector of the United States, which is expected closer to the afternoon. In the absence of bears' activity in the 1.3931 area, it is best not to rush to sell the pound. I recommend opening short positions immediately on a rebound only from a maximum of 1.3995, counting on a downward correction of 30-35 points within a day. The next major area of resistance is seen around 1.4062.

Exchange Rates 05.03.2021 analysis

The Commitment of Traders (COT) report for February 23 revealed that short commercial positions decreased while long positions sharply increased. Bulls are active even in the area of annual highs, which only accelerates the upward trend. However, you need to understand that this report only considers prices before the pound started to fall in the middle of last week, so the picture is slightly different. In the medium term, the downward correction observed last week will only play into the hands of bulls. The anticipation of a quarantine rollback in March will support the pound, and so do new measures to help the UK population in the fight against the coronavirus pandemic, which will be announced by Treasury Secretary Rishi Sunak this week. Long non-commercial positions rose from 60,269 to 68,266. At the same time, short non-commercials fell from 38,102 to 37,288, which retains good prospects for the pound to continue its gains. As a result, the non-commercial net position rose to 30,978 from 22,167 a week earlier. The weekly closing price was 1.4067 against 1.3914. The observed downward correction in the pound will only attract new buyers.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates a succeeding decline for 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 the classic daily moving averages on the daily D1 chart.

Bollinger Bands

A breakout of the lower border of the indicator in the 1.3860 area will increase the pressure on the pair. Growth will be limited in the area of the upper border of the indicator in the area of 1.3995.

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) Quick 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 short and long positions of non-commercial traders.

*La presente analisi del mercato ha un carattere esclusivamente informativo e non rappresenta una guida per l`effettuazione di una transazione.

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Analista del: Miroslaw Bawulski
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