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

Nothing interesting happened in the first half of the day. Let's look at the 5-minute chart. It is clear that against the background of low volatility, there are not many people who want to continue buying the British pound at weekly highs. It may continue to create additional pressure on the pair, which will lead to an update of the level of 1.3741, which is more attractive for purchases. There were also no signals for entering the market during the European session. From a technical point of view, nothing has changed. A breakout and a test of the 1.3777 level from top to bottom will form a good entry point into long positions to continue the bullish trend and reach the maximum of 1.3809. The prospect of updating 1.3841 opens higher, where I recommend fixing the profits. A more distant target will be the area of 1.3876, from which about 70 points will remain to monthly highs. In the case of a decline in GBP/USD in the second half of the day, which we can now observe on the chart, the optimal scenario will be purchases from the level of 1.3741, but only if a false breakdown is formed. There are also moving averages that play on the buyers' side. If the pressure on the pound persists and the bulls do not show anything in the support area of 1.3741 – the optimal scenario will be long positions from the minimum of 1.3704, but only after forming a false breakdown. You can buy GBP/USD immediately for a rebound in the area of Friday's low of 1.3680 with the aim of an upward correction of 15-20 points within the day.

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

The initial task of the bears remains to protect the resistance of 1.3777, which was formed following the results of last Friday. The optimal scenario for opening short positions will be the formation of a false breakdown at this level, which will weaken the position of the British pound and push the pair to the middle of the side channel 1.3741, which was visible at the end of last week. There are moving averages, so a break and a test from the bottom-up form an additional entry point into short positions. It will push GBP/USD even lower - to 1.3704, and there it is just a short distance away to the minimum - 1.3680, where I recommend fixing the profits. In the absence of active sellers around 1.3777, I advise you to postpone sales until the next major resistance of 1.3809. I also recommend opening short positions from there only if a false breakdown is formed. You can sell GBP/USD immediately on a rebound from a new weekly high in the area of 1.3841, counting on a downward correction of 25-30 points within the day.

The COT reports (Commitment of Traders) for August 17 recorded a reduction in both short and long positions. The fact that representatives of the Bank of England are in no hurry to talk about changing monetary policy affects the activity of traders. Last week's data on retail sales and inflation in the UK again proved that no one would rush to raise interest rates until the end of 2022, and this is a fairly long time horizon. It put pressure on the British pound. But I have repeatedly noted that the lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the Bank of England in the future. The COT report indicates that long non-commercial positions decreased from the level of 44,750 to the level of 41,898.

In contrast, short non-commercial positions decreased from the level of 37,680 to the level of 37,2474, indicating an almost complete balance in the balance of power. As a result, the non-commercial net position slightly decreased and amounted to 4,651, compared to 7,070 a week earlier. The closing price of last week remained almost unchanged at 1.3840 against 1.3846.

Signals of indicators:

Moving averages

Trading is conducted above 30 and 50 daily averages, which indicates that the pound will continue to grow in the short term.

Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the lower limit of the indicator in the area of 1.3741 will increase the pressure on the pair. A break of the upper limit in the area of 1.3777 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 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.