26.03.202108:50 Forex Analysis & Reviews: GBP/USD: plan for the European session on March 26. COT reports. Bulls try to surpass 1.3730, which leads to a new wave of growth for the pound

To open long positions on GBP/USD, you need:

Several signals to enter the market appeared yesterday. Let's take a look at the 5 minute chart and break down the trades. I advised you to pay attention to the 1.3680 level in my morning forecast and make a decision from it. You can see how the bears tried to surpass 1.3680, but bulls are quickly regaining control of the market, forming a false breakout. An excellent chance for opening long positions was formed from top to bottom on the reverse return and the test of 1.3680, which pushed the pound to rise to the resistance area of 1.3730. I recommended taking profits at that level. The movement was around 50 points. When the 1.3730 level was re-tested in the afternoon, the bears managed to form a false breakout, which resulted in creating a signal to open short positions. However, a major downward movement for the pound did not take place and after a while the bulls rose above the 1.3730 level. Since everything happened by the end of the US session, I did not enter long positions from the 1.3730 level, although, as we can see, it continues to rise in the Asian session.

There is a lot of data that will be released today, and you should pay attention to them. In the first half of the day, a surge in volatility may result from data on changes in the volume of retail trade, taking into account fuel costs in the UK, and then the minutes of the meeting of the Financial Policy Committee of the Bank of England will be published. All that buyers need to do is to protect support at 1.3730 during the European session, just below which the moving averages pass, which are already playing on the side of buyers. Forming a false breakout there creates an excellent signal to enter long positions in order to push GBP/USD to the next resistance at 1.3797, where I recommend taking profits. A breakthrough and consolidation above 1.3797 will only strengthen the pound's position, which will lead to a new high at 1.3848. In case bulls are not active in the support area of 1.3730, then it is best not to rush into buying: the best option would be to open long positions immediately on a rebound from the weekly local low of 1.3672, counting on an upward correction of 25-30 points within the day.

To open short positions on GBP/USD, you need:

The bears' initial task is to regain control of support at 1.3730. Considering that trading is currently taking place in the middle of the channel, it is better not to guess which direction the pair will choose. A breakthrough and consolidation below 1.3730 will create a good signal to open short positions in hopes of returning to the week's low in the 1.3672 area, where I recommend taking profits. In the event of a succeeding upward correction in GBP/USD, it is best not to rush to sell, but to wait for the 1.3797 high to be tested, from where you can open short positions immediately on a rebound, counting on a downward correction of 25-30 points within the day. The next major resistance is seen around 1.3848.

The Commitment of Traders (COT) report for March 15 revealed a reduction in both short and long commercial positions. Once again, the closing of long positions became quite strong, which led to a reduction in the positive delta. The main problem for risky assets, which can be attributed to the pound, is still the growth in the yield of US bonds, which provides serious support to the dollar. However, in the medium term, buyers of the pound will certainly take advantage of this moment to enter the market at more attractive prices, since a good vaccination program will allow more active quarantine measures to be phased out. In the future, this will lead to a major growth in the economy, which will increase inflationary pressures and make the Bank of England seriously think about phasing out stimulus measures and raising interest rates. Expectations of such decisions will have a positive effect on the pound, which will lead to its growth. Long non-commercial positions declined from 61,271 to 55,190. At the same time, non-commercial short positions fell from 27,360 to 26,590, indicating a possible succeeding decline for the pair. As a result, the non-commercial net position fell to 28,600 from 33,911 a week earlier. The weekly closing price remained practically unchanged and reached 1.3898 against 1.3821. The observed downward correction in the pound will attract new buyers.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates that the upward correction will continue for the pound.

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.

Bollinger Bands

In case the pair falls, support will be provided by the average border of the indicator in the area of 1.3730.

Description of indicators

• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 50. It is marked in yellow on the chart.
• Moving average (moving average, determines the current trend by smoothing out volatility and noise). Period 30. It is marked in green on the chart.
• MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages) Quick EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial speculative traders, such as individual traders, hedge funds, and large institutions that 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.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between short and long positions of non-commercial traders.