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

The British pound formed one sell signal today in the first half of the day. Let's look at the 5-minute chart and figure out the entry point. In my morning forecast, I paid attention to the level of 1.3742 and recommended opening short positions from it. A breakout and a test of this area from the bottom up formed an excellent entry point. However, there was no major downward movement. The drop was about 20 points, and then the market regained its balance. It indicates the presence of large buyers who are not ready to measure themselves with a downward correction of the pair even at the end of the week.

A sharp drop in manufacturing activity growth and slower growth in the UK services sector in the summer period put pressure on the British pound. In the second half of the day, the technical picture of the pair changed slightly. Buyers now need to think about how to bring the new resistance of 1.3750 back under control. The reverse test of this level from top to bottom and weak data on the US economy form an additional signal to open long positions in the expectation of a return to 1.3783. A break in this range will form a new upward trend for the pair and open a direct road to the highs of 1.3819 and 1.3859, where I recommend fixing the profits. If the bears are more persistent and continue to pressure the pair, it is best not to rush with long positions. The optimal scenario would be a decline in GBP/USD and the formation of a false breakdown in the area of 1.3714. You can buy the pound immediately for a rebound based on an upward correction of 25-30 points within the day only from the minimum of 1.3672.

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

The initial task of the bears is now to protect the resistance of 1.3750, which was formed in the first half of the day and above which the moving averages pass. Strong data on the US economy may disappoint buyers of the pound, who will begin to fix positions at the end of the week. The formation of a false breakdown at the level of 1.3750 will only aggravate the situation, which will lead to the formation of a sell signal in the expectation of a further decline of the pair to the support of 1.3714. A breakdown and a reverse test of this level from the bottom up will lead to forming a new entry point into short positions. Demolition of buyers' stop orders below will collapse GBP/USD to a minimum of 1.3672, where I recommend fixing the profits. In the absence of active actions of sellers in the area of 1.3750, I recommend postponing sales until the test of a larger maximum of 1.3783. It is also possible to sell GBP/USD immediately on a rebound from 1.3819 based on a downward correction of 25-30 points within the day.

The COT reports (Commitment of Traders) for July 13 recorded a sharp reduction in long positions and a slight increase in short ones. It suggests that inflation in the United States of America still affected the mood of buyers of the pound in a negative direction. The fact that the Bank of England representatives have recently been reluctant to talk about plans to reduce the bond purchase program once again proves their cautious position on this issue. On July 19 of this year, the UK government completely lifted all quarantine restrictions. However, according to the latest figures on the incidence of a new coronavirus "Delta" strain in the country, this is not for long. Undoubtedly, after each major movement of the GBP/USD down, traders show special interest since the central bank will sooner or later start talking about curtailing measures to support the economy, positively impacting the British pound and leading to its growth. But while there has not been a serious exit beyond the target level of inflation in the UK, it is unlikely that the Bank of England will rush to change its policy. Despite this, the optimal scenario is to buy the pound with each good decline in pair with the US dollar. The COT report indicates that long non-commercial positions decreased from the level of 57,232 to the level of 44,686, while short non-commercial positions increased from the level of 35,329 to the level of 36,717. As a result, the non-commercial net position decreased to 7,969 against 21,903. The closing price of last week rose slightly and amounted to 1.3886 against 1.3853.

Signals of indicators:

Moving averages

Trading is conducted below 30 and 50 daily averages, which indicates a change in market sentiment at the end of the week.

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

If the pair grows, the upper limit of the indicator in the area of 1.3783 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 specific 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.