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

In my morning forecast, I paid attention to the level of 1.3445 and recommended making decisions on entering the market. Let's take a look at the 5-minute chart and figure out the entry point. Due to the very low volatility of the pair in the first half of the day, I did not wait for the update of the nearest resistance at 1.3445. I did not see the pound fall to the area of 1.3417. As a result, there were no signals to enter the market, and the technical picture remained unchanged for the American session. And what were the entry points for the euro this morning?

In the afternoon, the pound may be helped by weak data on the US economy. The housing price index and data on the Fed-Richmond manufacturing index are expected. Weak indicators will increase pressure on the dollar and lead to an update of the resistance at 1.3445. However, the primary task of buyers today remains to protect the new support of 1.3417. This level is very important, as its breakdown can force traders to take profits from the December highs at the end of the year, which will lead to pressure on the pound. Only the formation of a false breakdown at 1.3417 forms a signal to buy GBP/USD with the prospect of continuing the bull market aimed at breaking the resistance of 1.3445, which we stumbled over yesterday. A breakdown and test of this level from top to bottom will give an additional entry point and strengthen the position of buyers to continue building a bullish trend and update the highs: 1.3472 and 1.3506. A more distant target will be the 1.3560 area, where I recommend fixing the profits. In the scenario of a decline in the pound during the US session and a lack of activity at 1.3417, it is best to postpone purchases to the level of 1.3389 - there is a large static buyer in this area. Only the formation of a false breakdown there will give an entry point in the expectation of maintaining bullish momentum. You can buy GBP/USD immediately on a rebound from 1.3368, or even lower - from a minimum of 1.3344, counting on a correction of 20-25 points within a day.

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

Bears are also not particularly active yet, fearing the continuation of the bull market observed throughout this month. Now they need to think about something around 1.3445, and the primary task will be to protect this range. The formation of a false breakdown at this level forms an entry point into short positions, followed by a decline in the pair to the area of 1.3417, for which we will have to fight hard since the bulls do not intend to let go of the upward trend at the end of the year in anticipation of a more aggressive monetary policy from the Bank of England in the spring. A breakdown of 1.3417 and a reverse test from the bottom up will increase pressure on the pound and dump it to the next support of 1.3389. Only the consolidation and the reverse test of 1.3389 from the bottom up will give a new entry point into short positions with the prospect of a decline in GBP/USD by 1.3368 and 1.3344, where I recommend fixing the profits. If the pair grows during the American session and sellers are weak at 1.3445, it is best to postpone sales to a larger resistance of 1.3472. I also advise you to open short positions there only in case of a false breakdown. You can sell GBP/USD immediately for a rebound from the maximum of 1.3506, or even higher - from 1.3560, counting on the pair's rebound down by 20-25 points within a day.

In the COT reports (Commitment of Traders) for December 14, a reduction in both short and long positions was recorded. Considering that long positions were reduced by almost half, this led to serious changes in the negative delta. However, it is worth noting that these data do not take into account the results of the meeting of the Federal Reserve System and the Bank of England. But if you look at the big picture in general, the prospects for the British pound look rather sad. After the Bank of England's decision to raise interest rates, the pair shot up, but the next day it underwent a hard sell-off, which knocked many market participants out of the saddle, hoping for the end of the bearish trend. The US dollar is likely to continue to be in demand amid uncertainty with the new strain of the omicron coronavirus, which is spreading at a fairly rapid pace, scaring market participants from active actions: no one wants to buy an overbought dollar, but the cheap pound is also not a very attractive tool yet. Until the situation with the next wave of coronavirus returns to normal, it will be quite problematic to talk about the growth of the pound. However, high inflation remains the main reason why the Bank of England will continue to raise interest rates next year, which will support the British pound. The COT report for December 14 indicated that long non-commercial positions fell from the level of 48,950 to the level of 29,497, while short non-commercial positions fell from the level of 87,227 to the level of 80,245. This led to an increase in the negative non-commercial net position from 38,277 to -50,748. The weekly closing price sank from 1.3262 to 1.3213.

Signals of indicators:

Moving Averages

Trading is conducted above 30 and 50 daily moving averages, which preserves the chance of further growth of the pound in the short term.

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 the classic daily moving averages on the daily chart D1.

Bollinger Bands

In the case of a decline in the pair, the average border of the indicator around 1.3420 will act as support. A breakthrough of the upper limit of the indicator in the area of 1.3445 will lead to a new wave of growth of the pound.

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.