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To open long positions on GBP/USD, bulls should:
In the first half of the day, the price failed to reach any of the levels designated by me. Thus, I did not find any entry signals on the M5 chart. The economic reports published in the United Kingdom did not have a significant effect on the pound. The currency remained in the sideways channel ahead of Jerome Powell's testimony in Congress. As a result, I had to adjust the the closest support and resistance level in order to reap larger profits in the second half of the day.
The trading plan for the second half of the day is still the same. Thus, bulls should break through the support level of 1.4105 and consolidate above it. They failed to reach this mark in the first half of the day. If the price tests this level, this will give a buy signal and the upward trend will continue. Consequently, the price may go up to the high of 1.4186, where bulls should set a Take Profit order. Another target is seen at 1.4241. However, the pair is unlikely to approach this target without another portion of positive fundamental data. In case GBP/USD enters correction in the second half of the day, bulls should not rush to buy the pair. Instead, they should wait for a false breakout in the area of the 1.4055 support level. The pressure on the pound may increase after the release of economics statistics in the United States and Fed Chairman Powell's testimony in Congress during the North American session. If bulls are inactive at 1.4055, one should wait for a deeper downward correction and a test of the low at 1.3983. Then, it will be possible to buy the pound on a rebound of 30-40 pips within the day.
To open short positions on GBP/USD, bears should:
Today's UK unemployment statistics did not affect the currency pair. Accurate figures will become known only after the government has curtailed stimulus programs aimed to provide support for the economy and the labor market. The trading plan for the second half of the day is still the same. After a false breakout at 1.4105, pressure on the pair will increase and the market will enter a correction in the second half of the day. An important task for bears will be to regain control over the support level of 1.4055. It will be possible only if the US consumer confidence report turns out to be positive. In fact, the indicator is expected to beat economists' forecast. A sell signal may occur after a breakout and test of this level. In such a case, GBP/USD may go down to the low of 1.3983 where bears are recommended to take profit. Another target is seen near 1.3927. If the price rises during the North American session and bulls are inactive in the area of the 1.4105 resistance level, you should refrain from selling the pair. Instead, you should wait for a breakout at the high of 1.4186. Then, bears can open sell deals immediately on a rebound, taking into account a downward correction of 30-35 pips within the day. The next resistance level is seen in the area of 1.4241.
As for the Commitment of Traders (COT) report for February 16, the number of both long and short positions decreased. Despite this fact, bulls continue reaching new highs amid positive news about the vaccination rollout in the UK and optimistic fundamental statistics, showing the expansion of the economy even during lockdown. The UK is expected to ease quarantine restrictions in March. This news will stir up investors' interest in the pound. Long non-commercial positions declined to 60,269 from 60,513. Short non-commercial positions fell to 38,102 from 39,395, keeping bullish sentiment in the market. As a result, the non-profit net position rose to 22,167 from 21,118 recorded in the previous week. The weekly closing price was 1.3914 against 1.3745. Any downward corrections with an immediate buy back of the British pound once again prove the presence of large players in the market. New highs and price consolidation on these levels will only lead to the strengthening of the bullish trend that started at the beginning of February 2021.
Indicator signals:
Moving averages
Trading is carried out above MA(30) and MA(50), which indicates a bullish market.
Note: Periods and prices of moving averages are viewed by the author of the article on the hourly chart and differ from the general definition of the classic daily moving averages on the D1 chart.
Bollinger Bands
A breakout of the upper border of the indicator at 1.4093 will lead to growth in the price of the pound. A breakout of the lower border in the area of 1.4055 will increase pressure on the pound.
Description of indicators
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