To open long positions on GBP/USD, you need:
In my morning forecast, I paid attention to the level of 1.3515 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out what happened. Monthly UK GDP data for December last year put pressure on the pair, which led to a slight decline in the pound in the first half of the day. However, the bulls performed well in the 1.3515 support area and managed to defend this level. The formation of a false breakdown there led to an excellent entry point into long positions, which caused the pound to grow by 50 points. However, after the resistance test of 1.3558, the initiative was intercepted by sellers. At the time of writing, there was a false breakdown and a signal to sell the pound. The technical picture for the second half of the day has changed a little and this needs to be taken into account. And what were the entry points for the euro this morning?
During the American session, quite interesting data on the consumer sentiment index from the University of Michigan are coming out. The growth of this indicator may act as a catalyst for the further fall of the euro against the US dollar, which was observed yesterday during the US session. Data on inflation expectations from the University of Michigan will not be of much interest, since everything is clear with this component anyway. The key task of the bulls in the second half of the day will be not only to protect the support of 1.3520 but also to go beyond the new resistance of 1.3565 formed following the results of the European session. Just below this level, there are moving averages that play on the sellers' side. Purchases from 1.3520 can be made only in the case of a decline in the pair after the US data and the formation of a false breakdown at this level. This forms another entry point into long positions by analogy with the one I discussed above. A breakout and a test of the 1.3565 range from top to bottom is an additional buy signal with a rise to 1.3602, where I recommend fixing the profits. A longer-range target will be a maximum of 1.3640. With a market like yesterday, you can count on anything. Under the scenario of a decline in GBP/USD during the US session and the absence of bulls at 1.3520, it is better not to rush into buying risky assets. I advise you to wait for the test of the next major level of 1.3477. Only the formation of a false breakdown there will give an entry point to long positions. You can buy the pound immediately for a rebound from 1.3445, or even lower - from this month's minimum of 1.3407, counting on a correction of 20-25 points within a day.
To open short positions on GBP/USD, you need:
The bears tried to continue what they started yesterday afternoon but were met with a tough rebuff just at the level where the market turned up yesterday after the US inflation data. A lot will depend on whether the bulls will be able to pick up the resistance of 1.3565 today, which they are actively testing. The primary task of sellers is to protect this particular range since by releasing the pound above this level, we will see a new large wave of growth on stop orders. The formation of a false breakdown together with strong statistics on the US - all this forms an entry point into short positions. You can count on the return of the bear market and the pair's decline to the support area of 1.3520. A breakdown and a test of this range from the bottom up will give an additional entry point into short positions to fall to 1.3477 and 1.3445, where I recommend taking the profits. If the pair grows during the American session, as well as weak sellers' activity at 1.3565, it is best to postpone sales to the level of 1.3602. Bulls may close their positions there at the end of the week, which will lead to a downward correction of the pair. Therefore, I advise you to open short positions there also in case of a false breakdown. You can sell GBP/USD immediately for a rebound from 1.3640, or even higher - from the maximum in the area of 1.3683, counting on the pair's rebound down by 20-25 points within a day.
The COT reports (Commitment of Traders) for February 1 recorded a sharp increase in short positions and a reduction in long ones. All this led to an increase in the negative value of the delta. However, it should be understood that the report does not take into account the results of the meeting of the Bank of England, at which it was decided to raise interest rates. Despite this, it did not help the pound much, since everyone understands that such policy changes were made neither from a good life, but in the fight against high inflation. Given that the British economy is currently going through hard times and at any moment the pace of economic growth may seriously slow down - the increase in rates did not lead to a rapid increase in the British pound. We should not forget about the increase in interest rates by the Federal Reserve System in March this year, which will be an additional deterrent for buyers of GBP/USD. Some traders expect that the central bank may resort to more aggressive actions and raise rates by 0.5% at once, rather than by 0.25% - this will become a kind of bullish signal for the US dollar. The COT report for February 1 indicated that long non-commercial positions decreased from the level of 36,666 to the level of 29,597, while short non-commercial positions increased from the level of 44,429 to the level of 53,202. This led to an even greater increase in the negative non-commercial net position from -7,763 to -23,605. The weekly closing price dropped from 1.3488 to 1.3444.
Signals of indicators:
Moving averages
Trading is conducted around 30 and 50 daily moving averages, which indicates the lateral nature of the market.
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, the lower limit of the indicator around 1.3500 will act as support. In the case of growth, the upper limit of the indicator around 1.3630 will act as 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.
