To open long positions on GBP/USD, you need:
Yesterday there was only one good signal to enter the market, which I drew attention to in my morning forecast. Let's take a look at the 5-minute chart and talk about what happened: you can clearly see how, after several unsuccessful attempts to catch on to resistance at 1.4000, the bulls retreated from the market, giving control to sellers. A false breakout of the 1.4000 level resulted in creating a good entry point for short positions, which ultimately pushed the pair to the 1.3944 target level, to which we fell short of reaching by just a couple of points. Of course, it was quite difficult to sit out all the downward movement after yesterday's bull market, but whoever managed to do so could easily take away about 50 points of profit. I took only 27. I did not wait for anything specific from the 1.3944 level in the afternoon, and after "smearing" this range, the bears still managed to end the day lower, retaining control of the market.
Today, a number of fundamental reports that are related to inflation will be released in the UK. Good performance can strengthen the pound, which can lead to growth in the morning. In order to restore GBP/USD growth, bulls must surpass the 1.3944 level, which they missed yesterday afternoon. Consolidation on this range with a test from top to bottom can create an entry point for long positions in continuation of the upward trend that formed on April 8. Such a scenario will definitely open a direct road to this week's high at 1.4000, while the next major resistance area is seen around 1.4062, where I recommend taking profit. In case the pound falls after we receive the inflation report, protecting the 1.3892 level and forming a false breakout in this area can create a signal for entering long positions in hopes of restoring the pair's growth. In case the bulls are not active in the support area of 1.3892, then it is best not to rush to buy: the best option would be to open long positions immediately on a rebound from a large local low like 1.3838, counting on an upward correction of 25-30 points within the day. The next big support is seen at 1.3792.
To open short positions on GBP/USD, you need:
The pound will remain under pressure as long as the pair is below the resistance level of 1.3944. Forming a false breakout in this area in the first half of the day can create an additional entry point into short positions against the trend, which will then lead to a downward correction to the support area of 1.3892, from where it will be possible to observe how bulls are active. Being able to surpass this range and settle below it along with testing it from the bottom up can create a good signal for opening new short positions in hopes that GBP/USD would fall to a low like 1.3838, and the next target will be support at 1.3792, where I recommend taking profits. If bears are not active in the resistance area of 1.3944, then it is best not to rush to sell: in this case, I advise you to hold back from short positions immediately to rebound from yesterday's high of 1.4000, counting on a downward correction of 25-30 points within the day. The next major resistance is seen at 1.4062.
The Commitment of Traders (COT) for April 13 revealed an increase in both long and short positions, while the total non-commercial net position grew, which indicates that the bulls are more active. Good fundamental data, which have recently been released on the UK economy, once again prove that there is a fairly high probability of strong economic growth rates in the second quarter of this year, which will further contribute to the pound's growth in the medium term. The Bank of England has long been talking about how to proceed with stimulating monetary policy, as additional inflation concerns will emerge as the economy grows. The pound's growth at the beginning of this week once again proves its appeal for big players and, most likely, the bull market will only gain momentum by this summer.
The COT report indicated that long non-commercial positions rose from 45,270 to 52,851. At the same time, short non-commercials increased from 25,219 to 27,261, bringing the non-commercial net position to 25,590 from 19,951 weeks earlier. On the contrary, the weekly closing price dropped to 1.3753 from 1.3913.
Trading is carried out above 30 and 50 moving averages, which indicates an attempt by the bears to break the upward trend seen earlier this week.
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.
Surpassing the lower border of the indicator in the area of 1.3920 will increase the pressure on the pair. Growth will be limited by the upper level of the indicator in the 1.3980 area.
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.