FX.co ★ GBP/USD: plan for the European session on April 7. COT reports. Pound fell against the dollar. Bears are aiming to surpass 1.3814

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

A fairly large number of signals to enter the market appeared yesterday, and all of them brought a good profit. Let's take a look at the 5 minute chart and break down the entry points. Forming a false breakout in the resistance area of 1.3914 in the first half of the day, where I recommended selling the euro in my morning forecast, resulted in a good entry point for short positions, which increased the pressure on the pair and dropped it to the support area of 1.3863. A breakthrough and consolidation below this level with a reverse test (to which only 3 points were missing) - resulted in creating another entry point to sell the pound, which pushed it into the area of far morning support at 1.3814, where I recommended buying the pair immediately on the rebound. A rebound of more than 30 points could not fail to please. I wrote about short positions from the 1.3863 level in the afternoon forecast. The chart clearly shows how the bears form a false breakout there, drawing an excellent entry point into short positions. After that, the pair falls to a low like 1.3814.

From a technical point of view, nothing has changed for the pound's bulls. The primary task is to regain control over resistance at 1.3863, which was not achieved yesterday. Being able to settle above this range, along with a test from top to bottom, will lead to creating a good entry point, counting on pushing the pair to the resistance area of 1.3914, where I recommend taking profits. The next target will be the highs of 1.3914, however, the quote can only reach it if we receive very good indicators of activity in the UK services sector. In case GBP/USD falls in the first half of the day, then it is best to count on long positions from the low of 1.3814, but only if a false breakout is formed there. Now I recommend buying GBP/USD immediately on a rebound only from the support of 1.3760, counting on an upward correction of 25-30 points within the day.

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

The bears fully coped with their tasks in the afternoon, refusing to allow the pound to rise above 1.3863. Most likely, the bulls will try to regain control of this level today after we receive good reports on the UK services sector, so forming a false breakout in the resistance area of 1.3863 creates an excellent entry point for short positions. In this case, the next goal is to surpass the local low at 1.3814. A test of this level from the bottom up creates a good entry point for short positions and will increase the pressure on the pair, which will open a direct road to the 1.3760 area, where I recommend taking profits. If the pound is not under pressure in the resistance area of 1.3863, in the area of which the moving averages are also running on the bears' side, then it is best to postpone short positions until the 1.3914 high is renewed. You can sell GBP/USD there immediately on a rebound, counting on a downward correction of 25-30 points within the day.

The Commitment of Traders (COT) for March 30 recorded a reduction in both long and short positions, while the total non-commercial net position increased. Bulls have been active in the past week with every approach to major support levels, which has led to such a mess in the market. The latest report on the UK economy made it possible to build a new upward correction for the pound, albeit so far only in the short term. Confidence continues to grow among investors and economists that the UK economic recovery is gaining quite good momentum, which will support the British pound this summer, as disagreements grow at the Bank of England over how the economy will develop further and when to respond to all this. Those who expect to buy the pound should take a closer look at the market.

So: long non-commercial positions fell from 51,843 to 47,222. At the same time, short non-commercial positions fell from 30,024 to 22,263, which indicates a serious revision of forces in the market in the near future. As a result, the non-commercial net position rose to 29,959 from 21,819 a week earlier. The weekly closing price dropped to 1.3774 from 1.3859.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates the bears' attempt to continue the downward trend.

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 daily D1 chart.

Bollinger Bands

Surpassing the upper border of the indicator in the area of 1.3863 will lead to a new wave of growth for the pound. A breakthrough of the lower boundary at 1.3814 will increase the pressure on 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.