FX.co ★ GBP/USD: plan for the European session on April 14. COT reports. Bulls continue to fight and defend support at 1.3723. Aim for resistance at 1.3773

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

Despite the pound's high volatility yesterday, the technical picture has not changed in any way, although there were several signals to enter the market. Let's take a look at the 5-minute chart and talk about what happened: you can clearly see how the bears are trying to surpass the 1.3723 level and settle below it before the release of important US data. The quote sharply grew above this level just before the reports were released, which destroys stop orders and brings losses. The pound then sharply fell after the reports were published, but then it returned to the 1.3723 level and tested it from top to bottom. This leads to creating a good entry point for you to open long positions, as the quote reached the target in the resistance area of 1.3773 in today's Asian session.

Considering that nothing in the first half of the day has changed from a technical point of view, the strategy for the first half of the day is as follows: the bulls need to rise above resistance at 1.3773, since being able to settle at this level with a test from top to bottom can create a new entry point for you to open long positions and strengthen pound positions. This will lead to sustaining the upward correction so it can reach a high like 1.3825, where I recommend taking profits. The next, larger area of resistance is seen around 1.3876. But it will be available only in case of a bullish market reaction to Federal Reserve Chairman Jerome Powell's speech, who can mention US inflation again, which will lead to a surge in volatility. In case GBP/USD falls during the European session, all buyers need to do is to protect support at 1.3723, which was done yesterday, maintaining hopes that the pair would rise in the near future. Moving averages, playing on the side of the bulls, also pass slightly above this level. Forming a false breakout there creates an excellent signal for you to enter long positions as GBP/USD continues to rise to the resistance of 1.3773. If bulls are not active in the support area of 1.3723, then it is best not to rush into long positions: the best option would be to open longs immediately on a rebound from a large local low at 1.3682, counting on an upward correction of 25-30 points within the day. The next major support is seen at 1.3639.

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

The bears' initial task is to regain control of support at 1.3723, which they failed to do yesterday afternoon. Since we will not receive important fundamental reports on the UK economy during the European session, and the market is now on the bulls' side: only a breakthrough and consolidation below the 1.3723 level, along with a test from the bottom up, can create a good signal for you to open short positions in hopes of returning to a low like 1.3681. Surpassing 1.3681 will open a straight road to the 1.3639 low, where I recommend taking profits, however, we can talk about implementing this scenario only after Powell gives his speech. In the event of a further upward correction in GBP/USD, then it is best not to rush to sell: you need to wait for a false breakout in the area of a high like 1.3773 and only then should you open short positions in order to resume the bear market. If bears are not active in the 1.3773 level, then the best option would be to open short positions immediately to rebound from the 1.3825 high, counting on a downward correction of 25-30 points within the day. The next major resistance is seen at 1.3876.

The Commitment of Traders (COT) for April 6 revealed that long positions decreased and short ones increased, while the total non-commercial net position fell. Bears have been actively selling the pound last week amid a tense Brexit situation, which led to riots in Ireland by the end of the week. Good fundamental reports on the UK economy that came out last week resulted in a high surge in volatility, afterwards the pair continued to fall. However, investors and economists believe that the UK economy is recovering and it is gaining quite good momentum. This will support the pound this summer. Meanwhile, at the Bank of England, the controversy over changes in monetary policy has long been growing, as additional inflation problems emerge as the economy grows and this will have to be addressed. Those who wish to buy the pound should take a closer look at the market, since there are quite good prices now, which may not be available in the near future.

So: long non-commercial positions fell from 47,222 to 45,270. At the same time, short non-commercial positions rose from 22,263 to 25,219, which indicates that bears are trying to control the market in the short term. As a result, the non-commercial net position fell to 19,951 from 21,819 a week earlier. On the contrary, the weekly closing price rose to 1.3913 from 1.3774.

Indicator signals:

Moving averages

Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bulls to resume the upward correction for the pair.

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 1.3773 will lead to a new wave of growth for the pound. Surpassing the lower border of the indicator in the area of 1.3723 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.