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To open long positions on GBP/USD, you need:
We also failed to achieve clear signals to enter the market yesterday afternoon, but we clearly see that the bulls have taken the important level of 1.3100, from which they will try to build a new upward wave today. Much will depend on the Bank of England's decisions on monetary policy. If it remains unchanged, it is unlikely for us to count on a new upward wave of GBP/USD and a break in the resistance of 1.3169, which is so necessary for continuing the trend. If the central bank hints at a policy change in the direction of expanding the bond purchase program, a break in the range of 1.3169 will be an excellent signal to open long positions in anticipation of updating the highs of 1.3228 and 1.3265, where I recommend taking profits. A more appropriate scenario for buying the pound is a false breakout forming in the support area of 1.3103, where the moving averages are currently kept. If there is no active movement up from this range, it is best to postpone long positions until the low of 1.3041 is updated, in anticipation of a correction of 30-40 points within the day.
Let me remind you that another increase in short positions was recorded in the Commitment of Traders (COT) reports for July 28, but long positions were seriously reduced. This suggests that there are more and more bears and confirms the theory that the pound's strength is only based on the dollar's weakness and sooner or later, everything will end, which will cause the pair to sharply drop, as the problems with Brexit and uncertainty about the prospect of economic recovery have not gone away. The COT report indicates that short non-commercial positions increased from the level of 61,310 to the level of 64,738 during the week. On the contrary, long non-commercial positions decreased from the level of 46,230 to the level of 39,392. As a result, the non-commercial net position increased its negative value to -25,409, against -15,080, which indicates the likelihood of the pound's sharp fall after the dollar recovers its strength.
To open short positions on GBP/USD, you need:
Sellers, although they tried, failed to protect the 1.3100 level, and now their main task for the first half of the day is to return this range. If an active growth is not recorded after the Bank of England meeting and the speech of Governor Andrew Bailey, the bears will try to take support for 1.3100, but I recommend opening short positions from there only after consolidating below this range. In this case, sellers will initially aim for the 1.3041 area, and further towards support at 1.2980, where I recommend taking profits. In addition, the bears can count a false breakout forming in the area of the monthly high of 1.3169. Only then will it be possible to open short positions in the area of this range. I recommend selling the pound immediately for a rebound only after updating the levels of 1.3228 and 1.3265 in anticipation of a correction of 30-40 points within the day.
Indicator signals:
Moving averages
Trading is carried out above 30 and 50 moving averages, which indicates the pound's growth along the trend.
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 D1 daily chart.
Bollinger Bands
A breakout of the upper border of the indicator around 1.3150 will lead to a new wave of growth in the pound. A break of the lower border of the indicator in the 1.3100 area will increase the pressure on the pound.
Description of indicators
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