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To open long positions on GBP/USD, you need:
As expected, all optimism from the future UK-EU deal was quickly dispelled, and the pound tumbled after EU officials stated that they did not intend to make any concessions under the trade deal. The pound significantly fell in the first half of the day. Take a look at the 5-minute chart, the bears tried to break below the 1.2911 level during the US session, and testing it from the bottom up produced a good entry point into short positions, which was only realized in the Asian session today.
The technical picture has slightly changed at the moment. Buyers will focus on resistance at 1.2933 in the first half of the day, getting the pair to settle in this area will open the possibility for a new wave of GBP/USD growth in the 1.3008 area. But the only thing that can support the pound is good news on Brexit, something we can hardly count on, which will lead to testing a high of 1.3080, where I recommend taking profit. An equally important task is to protect support at 1.2865, since this level is very important, from a technical point of view, for restoring the pound's growth in the short term. Forming a false breakout at this level will be a signal to open new long positions, in anticipation of the pound's growth in the afternoon. In case bulls are not active in this range, it is better not to rush to buy, but to wait until the nearest large support level in the area of 1.2807 has been tested. You can also open long positions immediately on a rebound from the low of 1.2749, counting on a correction of 20-30 points within the day.
The Commitment of Traders (COT) report for October 6 showed a minimal increase in short non-commercial positions from 51,961 to 51,996. Long non-commercial positions slightly rose from 39,216 to 40,698. As a result, non-commercial net position remained negative and reached -11,298 against -12,745, which indicates that sellers of the pound retain control and also shows their slight advantage in the current situation. The higher the pair grows, the more attractive it is to sell.
To open short positions on GBP/USD, you need:
Sellers need to defend resistance at 1.2933, but a lot will depend on news on the trade deal and decisions taken at today's EU Summit. Forming a false breakout at the 1.2933 level generates a signal to sell the pound, but bad news on Brexit is necessary in order to exert large bearish pressure on the pair, which is expected in the afternoon. After consolidating below support at 1.2865, we can expect the pair to fall and return to the 1.2807 area. A low of 1.2749 will be a distant target, and it is where I recommend taking profit. In case the pair grows in the first half of the day and there is no activity in the resistance area of 1.2933, it is best to postpone short positions until the 1.3008 high has been tested, where you can sell the pound immediately on a rebound, counting on a 20-30 point correction within the day.
Indicator signals:
Moving averages
Trading is carried out below 30 and 50 moving averages, which indicates another attempt by the bears to take control of the market.
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
Growth will be limited by the upper level of the indicator around 1.2950. A breakout of the lower border of the indicator in the 1.2865 area will increase the pressure on the pair.
Description of indicators
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