To open long positions on GBP / USD you need:
Quite a lot of good signals to enter the market were formed on Friday. Let’s take a look at the graphs and break them down. In the first half of the day, a good report on activity in the construction sector and speeches by representatives of the Bank of England did little to help buyers, which only allowed the pound to get close to the resistance of 1.3921. A false breakout on it formed a signal to open short positions, which then led to a sell-off in GBP / USD, allowing about 35 points to be taken from the market. Already after the release of data on the US economy, a large rise of the pair took place above the resistance of 1.3921. In my forecast for the second half of the day, I recommended opening short positions immediately on a rebound from resistance 1.3970, which is what happened. The downward movement was about 50 points. The reverse test from top to bottom level 1.3921 also generated a signal to open long positions in the continuation of the pair’s growth, which quickly brought the pound back to resistance at 1.3970, and then to a new high at 1.4016.
Now the buyers of the pound are confidently entrenched above the level of 1.4016 and are aiming at the breakdown of 1.4062. A break above this range with a test from top to bottom will lead to the formation of a good entry point into long positions in the expectation of a continuation of the bullish trend and an exit to the highs of 1.4115 and 1.4179, where I recommend taking profits. Considering that there are no important fundamental statistics today, the formation of a downward correction of the pair is possible. In this scenario, the first support level will be the area of 1.4016. The formation of a false breakout there will be an excellent signal to open new long positions in the continuation of the growth of the pound. In the absence of bulls’ activity there, which is unlikely, I recommend postponing long positions immediately to a rebound from a larger minimum of 1.3970 in the expectation of an upward correction of 20-25 points within the day. There are also moving averages, playing on the side of the buyers of the pound.
To open short positions on GBP / USD you need:
At the moment, sellers need to think about how to protect the resistance at 1.4062, to which the bulls are gradually pulling the pair. Considering that it is always a bad idea to trade against the trend, only the formation of a false breakout in the area of 1.4062 generates a signal to open short positions in the expectation of a downward correction of the pair to support 1.4016. A breakout of this area will quickly push the pound to a low of 1.3970, where I recommend taking profits, since there are moving averages, which will surely rebound upwards upon the first test. If sellers’ activity at the level of 1.4062 is not noticed, I recommend postponing sales until the new local high of 1.4115 is updated, from where you can open short positions immediately on a rebound with the aim of a downward correction of 20-25 points within the day. The next major resistance is seen around 1.4179.
EUR / USD: plan for the European session on May 10. Commitment of Traders COT reports (analysis of yesterday’s deals). Buyers are aiming for a breakout of the 1.2181 level, but there may be problems with it
Let me remind you that the COT reports (Commitment of Traders) for April 27 recorded a reduction in both long and short positions, while the total non-commercial net position increased. How it happened – let’s figure it out. Last week, we did not see any important fundamental statistics for the UK, so all the attention was on the European Parliament vote on Brexit, the results of which supported the pound. Also, the speeches of the Prime Minister of Great Britain and the possible earlier lifting of all quarantine restrictions on the territory of Britain allowed the buyers of the pound to adhere to their scenario to strengthen the pair. All this will continue to contribute to growth in the medium term, so I recommend betting on further strengthening against the US dollar. Any good downward correction of the pair is another reason to think about buying the pound, since the prospect of a recovery in the UK economy in the summer gives rise to a lot of optimism. The COT report indicated that long non-commercial positions declined from 61,053 to 59,917. At the same time, short non-commercials fell from 35,875 to 30,699, causing the non-commercial net position to rise to 29,218 against 25,178 a week earlier. Closing short positions once again points to the fact that the upside potential of the pound is enormous. Last week’s closing price also dropped slightly to 1.38947 against 1.39915.
Trading is carried out above 30 and 50 moving averages, which indicates the formation of an uptrend in 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.
A breakout of the upper border of the indicator in the area of 1.4075 will lead to a new wave of growth of the pound. In case of a decline in the pair, support will be provided by the average border of the indicator in the area of 1.4005.
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.
- MACD indicator (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.