To open long positions on GBP/USD, you need to:
In the first half of the day, two signals were formed to enter the market at once. Let's look at the 5-minute chart and analyze the trades: you can see how after the test of the support of 1.3718, its breakdown occurs and consolidation below this level. All we needed to do was wait for the bottom-up update of the range of 1.3718, which would lead to the formation of a signal to open short positions. Everything happened exactly according to the scenario I described in the morning forecast. On the chart, I marked the moment of the formation of the entry point (Sell). Immediately after that, the pair fell into the area of the next support of 1.3683, where a signal was formed to buy the pound. A false breakout and a return to this level, with its update already from top to bottom, formed an excellent entry point into long positions, which led to a rapid increase in GBP/USD in the first half of the day. I marked the point for buying the pound on the chart (Buy).
In the second half of the day, the technical picture in the pair has changed, so we will have to start from other levels. The initial task of buyers will be to break through and consolidate above the resistance of 1.3736, where the moving averages that limit the upward potential of the pair pass. The test of the level of 1.3736 from top to bottom, by analogy with the purchase, which I analyzed a little above, forms an excellent signal to open long positions in the expectation of the recovery of the pound already in the resistance area of 1.3796, where I recommend taking the profits. If there is no activity on the part of buyers in the area of 1.3736, I recommend postponing purchases until a new price formation is formed: all the bulls need is a false breakout in the support area of 1.3683, since only this scenario will return the large bulls in the first half of the day to the market. If we do not see an upward movement from the level of 1.3683, I recommend postponing purchases until the test of a more recent low of 1.3645, from which you can open long positions immediately for a rebound in the expectation of an upward correction of 20-25 points within the day.
To open short positions on GBP/USD, you need to:
The bears did a great job with their morning tasks, and now they plan to protect the new resistance of 1.3736. The formation of a false breakout at this level forms a new signal to open short positions to continue the bear market. An equally important task will be to break through and consolidate below the support of 1.3683. Only a test of this level from the bottom up will increase the pressure on GBP/USD and form a new signal to sell the pound in the area of the lows of 1.3645 and 1.3605, where I recommend taking the profits. If the bears lose control over the resistance of 1.3736 in the second half of the day - in this case, it is better not to rush with sales: the optimal scenario for opening short positions will be a test of the level of 1.3796, just below which the moving averages pass. You can sell GBP/USD immediately on a rebound with the expectation of a downward correction of 20-25 points within the day. The next major resistance level is seen at 1.3848.
Let me remind you that the COT reports (Commitment of Traders) for March 15 recorded a reduction in both short and long commercial positions. Once again, the closing of long positions was quite strong, which led to a reduction in the positive delta. The main problem for risky assets, which can include the British pound, remains the growth of US bond yields, which provides serious support to the US dollar. However, in the medium term, buyers of the pound will probably take advantage of this moment to enter the market at more attractive prices, as a good vaccination program will allow the population to more actively curtail quarantine measures. In the future, this will lead to a major jump in the economy, which will increase inflationary pressure and force the Bank of England to seriously consider scaling back stimulus measures and raising interest rates. Expectations of such decisions will have a positive impact on the British pound, which will lead to its growth. Long non-profit positions declined from the level of 61,271 to the level of 55,190. At the same time, the short non-profit declined from the level of 27,360 to the level of 26,590, which indicates a possible further decline in the pair. As a result, the non-profit net position fell to 28,600 from 33,911 a week earlier. The weekly closing price remained almost unchanged at 1.3898 against 1.3821. The observed downward correction in the pound will attract new buyers.
Signals of indicators:
Moving averages
Trading is conducted below 30 and 50 daily averages, which preserves the downward potential of the GBP/USD pair.
Note: The period and prices of the moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
In the case of growth, the upper limit of the indicator in the area of 1.3775 will act as a resistance.
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-profit 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.
