To open long positions on GBP/USD, you need:
A pretty good signal to sell the British pound appeared last Friday, which I paid attention to in my review for the afternoon. Let's figure it out. If you look at the 5-minute chart, you will see that after a breakout of support at 1.2751, the pair returned to this level and tested it, forming a false breakout there, which caused a signal to open short positions to appear, in order for the pound to fall along the trend. However, bears failed to push through the week's lows in the 1.2696 area, only slightly shifting this level down.
The Commitment of Traders (COT) reports for September 22 did not record significant changes in the market, as everyone took a wait-and-see attitude and are watching how the economy will react to the next phase of growth in the incidence of COVID-19 and how the situation will develop further. Brexit. Most likely, the pressure on the pound will gradually return as the second wave of coronavirus spreads and the negotiations on a trade deal between the UK and the EU become more complicated, where there is not even a hint of a compromise between the parties. Short non-commercial positions slightly decreased from 41,508 to 40,523 during the reporting week. Long non-commercial positions also decreased from 43,801 to 43,487. As a result, the non-commercial net position remained practically unchanged at 2,964. against 2,293 weeks earlier.
As for the current picture of the GBP/USD pair, traders need to get out of the horizontal channel, which is where the pair was last week. A breakout and settling above 1.2800 will be a signal to open long positions, which may lead to removing a number of sellers' stop orders and could strengthen the pair's correction to the highs of 1.2863 and 1.2962, where I recommend taking profits. In case the pair falls, the emphasis will be placed on protecting the middle of the channel (1.2744). Forming a false breakout there will be a signal to open long positions. In case bulls are not active at this level, as well as the absence of important fundamental data today, I recommend not to rush into longs, but to wait until the lower border of the horizontal channel at 1.2689 has been tested and afterwards you can buy the pound there for a rebound, counting on a correction of 20-30 points within the day...
To open short positions on GBP/USD, you need:
Sellers need to defend resistance at 1.2800, where a false breakout will be another signal to open short positions in the hopes of continuing the bear market. Consolidating below the middle of the horizontal channel will be another signal to sell the pound with the main goal of breaking the monthly lows in the 1.2689 area, which will lead to a new, larger wave of GBP/USD movement down to the 1.2645 and 1.2585 areas, where I recommend taking profits. In case the pound grows above the resistance of 1.2800, it is better not to rush to sell, as the market may shift to the side of the buyers of the pound. Most likely, the bears will resort to protecting resistance at 1.2863, or it will be possible to sell GBP/USD immediately on a rebound from the high of 1.2963, counting on a correction of 20-30 points within the day.
Indicator signals:
Moving averages
Trading is carried out in the area of 30 and 50 moving averages, which indicates uncertainty with further direction in the short term.
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 D1 daily chart.
Bollinger Bands
A breakout of the lower border of the indicator in the 1.2689 area will lead to a new wave of decline for the pound. A breakout of the upper border in the 1.2790 area will lead to an upward correction of the pair.
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.
