To open long positions on GBP / USD you need:
Several market entry signals were generated last Friday. Let’s take a look at the 5-minute chart and deal with them: you can see how after the breakout of the support at 1.3749, which I emphasized in the previous forecast, the pound begins to fall sharply. Before the 1.3749 update, literally a couple of points were missing from the bottom up, which did not allow me to enter the market. Then there was a return to this level and consolidation above, which led to the formation of a good entry point into long positions. The growth was about 50 points. Selling from resistance 1.3804 did not bring the desired result, although in general the rebound was the expected 15 points.
The technical picture for today’s European session has changed a lot, since we were already at completely different levels and the bulls need to fight for the breakout of new highs. To maintain the advantage, an important task for the pound buyers is to break the level of 13838, which they reached last Friday. Fixation on this range with a test from top to bottom forms an entry point to long positions in the continuation of the uptrend formed on April 8. Such a scenario will surely open a direct road to the area of the new high at 1.3876, while the next large resistance area is seen around the level of 1.3914, where I recommend taking profits. But, before buying above 1.3838, pay attention to the divergence that is forming on the MACD indicator, which can significantly limit the upward potential of the pair. In the event of a decline in the pound, only the protection of the level of 1.3792 and the formation of a false breakout there form a signal to enter long positions in the expectation of further growth in GBP / USD. There are also moving averages, playing on the side of the buyers of the pound. In the scenario of the absence of bulls’ activity in the support area of 1.3792, 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 minimum of 1.3749, counting on an upward correction of 25-30 points within the day. The next major support is seen at 1.3706.
To open short positions on GBP / USD you need:
Considering that the pair has come out of the sideways channel and the market is under the control of buyers, bears need to try very hard today to prevent a breakout of resistance 1.3838. Only the formation of a false breakout there in the first half of the day forms a convenient entry point against the trend, which will lead to a downward correction of the pair to the area of the first support at 1.3892, from where it will be possible to observe the active actions of buyers. A breakout and consolidation below this range with a test of it from the bottom up will form a good signal to open new short positions with the expectation of a further fall in GBP / USD to a minimum of 1.3749, and a further target will be support at 1.3706, where I recommend taking profits. In the absence of activity on the part of sellers in the resistance area of 1.3838, it is best not to rush to sell: I recommend postponing short positions immediately for a rebound from a new high of 1.3876, counting on a downward correction of 25-30 points within the day. The next major resistance is seen at 1.3914.
I recommend that you familiarize yourself with my video forecast for today.
Let me remind you that the COT reports (Commitment of Traders) for April 6 recorded a reduction in long positions and an increase in short ones, while the total non-commercial net position decreased. Bears have been actively selling the pound all last week amid a tense Brexit situation, which led to riots in Ireland by the end of the week. The good fundamental data that came out on the UK economy last week led only to a high surge in volatility, after which the pair continued to fall. However, among investors and economists, there remains confidence that the recovery of the UK economy is gaining quite good momentum, which will support the British pound this summer. At the Bank of England, the controversy over changes in monetary policy has long been growing, as additional inflation problems will arise as the economy grows and will need to be addressed. Those who are counting on buying the pound should take a closer look at the market, since now there are quite good prices, 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 an attempt to control the market by sellers in the short term. As a result, the non-profit 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.
Trading is carried out above 30 and 50 moving averages, which indicates another rise in the pair in the short term.
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.
Growth will be limited by the upper level of the indicator in the 1.3850 area. In case of a decline in the pound, support will be provided by the lower border of the indicator at 1.3790.
Description of indicators
- Moving average (moving average, determines the current trend by smoothing volatility and noise). Period 50. Marked in yellow on the chart.
- Moving average (moving average, determines the current trend by smoothing volatility and noise). Period 30. Marked in green on the chart.
- Indicator MACD (Moving Average Convergence / Divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
- Bollinger Bands Period 20
- Non-commercial traders are speculators such as individual traders, hedge funds and large institutions who 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.
- Non-commercial short positions represent the total short open position of non-commercial traders.
- The total non-commercial net position is the difference between short and long positions of non-commercial traders.