To open long positions on GBP/USD, you need to:
In my morning forecast, I paid attention to the level of 1.4000 and recommended making a decision based on it. The 5-minute chart clearly shows how the bulls retreated from the market, giving control to the sellers. A false breakout of the level of 1.4000 led to the formation of a good entry point into short positions, which eventually pushed the pair to the target level of 1.3944, which we just missed by a couple of points. Of course, it was quite difficult to sit out the entire downward movement after yesterday's bull market, but anyone who managed it could easily carry away about 50 points of profit.
Data on the UK labor market did not provide significant support to the pound, although it turned out to be much better than economists' forecasts. The reports once again prove the fact of the economic recovery in the spring of this year, which will push the pound up in the medium term. As for today's second half of the day, I recommend opening long positions only after waiting for the formation of a false breakout in the support area of 1.3944, which will be the first excellent entry point in the continuation of the bull market observed yesterday. In the scenario of the absence of bull activity in the support area of 1.3944, it is best not to rush with purchases: the best option is to open long positions immediately on the rebound from the large local minimum of 1.3892, just above which the moving averages play on the side of buyers. In this case, you can count on the rapid growth of about 25-30 points within the day.
To open short positions on GBP/USD, you need to:
The sellers achieved their goal and managed to protect the resistance of 1.4000. The main task of the bears for the second half of the day will be to return the pair to the level of 1.3944, which they came close to during the European session. Only a consolidation below and a test of 1.3944 from the bottom up will lead to the formation of a signal to open short positions in the expectation of a return to the support of 1.3892, where I recommend fixing the profit. An equally important target for sellers will also be a breakdown of this range, which (thanks to the stop orders of the bulls, which are located just below) will quickly push GBP/USD to a minimum of 1.3838. A decline to this level will completely cancel out yesterday's bullish momentum. In the scenario of the pound's growth during the US session, it is best not to rush into sales. The resistance of 1.4000 and another false breakout at this level will be good guidelines for sellers to open short positions. In the absence of bearish activity, it is best to postpone short positions until the new monthly highs are updated in the area of 1.4062 and 1.4115, from where you can sell the pound immediately on a rebound in the expectation of a downward correction of 25-30 points within the day.
Let me remind you that the COT reports (Commitment of Traders) for April 13 recorded an increase in both long and short positions, while the total non-commercial net position increased, which indicates a higher activity of buyers of the pound. The good fundamental data that has recently been released on the UK economy once again proves a fairly high probability of strong economic growth in the 2nd quarter of this year, which will continue to contribute to the growth of the British pound in the medium term. The Bank of England has long been talking about how to proceed with a stimulating monetary policy since as the economy grows, there will be additional problems with inflation. The growth of the pound earlier this week once again proves its attractiveness to major players and most likely the bull market will only gain momentum by the summer of this year. The COT report shows that long non-profit positions rose from the level of 45,270 to the level of 52,851. At the same time, the short non-profit rose from the level of 25,219 to the level of 27,261, bringing the non-profit net position up to the level of 25,590 from the level of 19,951 a week earlier. The weekly closing price, on the contrary, fell to 1.3753 from 1.3913.
Signals of indicators:
Trading is conducted in the area of 30 and 50 daily averages, which threatens the upward trend.
Note: The period and prices of the 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.
In the case of growth, the upper limit of the indicator in the area of 1.4005 will act as a resistance. A break of the lower limit in the area of 1.3957 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. 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.