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To open long positions on GBP/USD, you need:
Yesterday several signals were formed to enter the market in short and long positions. Let's take a look at the 5 minute chart and break down the trades.
In my morning forecast, I drew attention to the support at 1.3790 and recommended opening long positions from it if a false breakout was formed. Everything happened exactly with the scenario that was described in the morning. Initially, there was a false breakout at 1.3790 and the pound rose to resistance at 1.3833. But even if you missed the entry point from 1.3790, I also advised you to buy the pound in order to continue the growth after the breakout and consolidation above the level of 1.3833, which happened. The growth was around 50 points.
After several successful attempts to defend the resistance at 1.3888, the bears still missed this level. However, I did not get a convenient entry point into long positions, and buying at the current highs against the bearish trend was not that interesting, so I did not enter the market anymore, although the pound continued to rise until the next resistance at 1.3938.
Before examining the technical picture of the pound, let's take a look at what happened in the futures market. The Commitment of Traders (COT) reports for June 15 showed that both long and short positions sharply decreased, however, this did not negatively affect the positive delta, but, on the contrary, even increased it due to a larger reduction in the bears' positions. The data was collected even before the Federal Reserve announced its decision on monetary policy, so I recommend not paying special attention to them, since at the moment the picture is already of a different nature. Good inflation in the UK will continue to create a certain pressure on the Bank of England, but so far there is no reason for panic, as is the case in the US, for the British central bank. This week, the central bank will hold a meeting, where most likely everything will remain unchanged, which may lead to continued pressure on the British pound and it may continue to fall against the US dollar in the short term. Similar statements from representatives of the Bank of England no longer work, so the market will only react to new guidelines for monetary policy, if any. Another important moment for the pound would be the full opening of the UK economy, which is slated for the 20th of this month. The spread of the Indian strain of the coronavirus in the territory creates a number of obstacles to this, which affects the desire of investors to buy the British pound. The best scenario is buying for every good decline in the British pound against the US dollar. The COT report showed that long non-commercial positions fell from 59,238 to 55,203, while short non-commercial positions significantly fell from 31,524 to 23,033. As a result, the non-commercial net position rose from 27,714 to 32,170. Last week's closing price significantly changed and reached 1.4109 against 1.4175.
Despite the large growth of the British pound, which we saw at the beginning of this week, the bulls' main task is to keep support at 1.3884 under control, just below which are the moving averages, indicating that the bulls want to continue the pair's upward correction. Important data on the UK will not be released today, forming a false breakout at the level of 1.3884 generates a signal to open long positions in hopes that the pound would rise with the goal of recovering to a high of 1.3993. In case the pound goes beyond this area, we can count on the resistance update at 1.4047, where I recommend taking profits. The pound's growth from yesterday is difficult to tie to something, so if the pair is under pressure again, then the bulls may not be active in the support area of 1.3884. In this case, I advise you to take your time with long positions. The optimal scenario would be long positions immediately on a rebound from the support of 1.3834, or even lower - from the level of 1.3790, counting on an upward correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
The bears need to think of a way to regain control of support at 1.3884, since they missed it yesterday afternoon, which resulted in a sharp removal of stop orders and the pound's succeeding recovery. It is quite possible that traders are experiencing some tension due to the Bank of England's meeting and are in a hurry to take profits after the recent major fall in the pound. However, before going beyond 1.3884, most likely the bears will have to form a false breakout at 1.3938, which can happen only if we receive a disappointing report on the volume of orders in the UK industry. An unsuccessful attempt to rise above this range creates an excellent signal to open short positions, in hopes of pulling it down to the 1.3884 area. A breakthrough and consolidation below this range with a reverse test from the bottom up can create another entry point into short positions in hopes that GBP/USD would return to a low like 1.3834 and an exit to the 1.3790 area, where I recommend taking profits. If the bears are not active in the 1.3938 area, then it is best to refrain from selling until the resistance at 1.3993 is updated, where you can then open short positions in the pound immediately on a rebound, counting on a downward correction of 20-25 points within the day. The next major resistance is seen at 1.4047.
Indicator signals:
Trading is carried out above 30 and 50 moving averages, which indicates the bulls' attempt to continue the corrective growth of the pair.
Moving averages
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
Growth will be limited by the upper level of the indicator in the area of 1.3955. In case the pound falls, support will be provided by the lower border of the indicator at 1.3865.
Description of indicators
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