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To open long positions on GBP/USD, it is required:
In my morning forecast, I paid attention to 1.3789 and recommended making decisions on entering the market. Let's look at the 5-minute chart and figure out where it was possible and necessary to buy the pound. The breakout and consolidation above the 1.3789 level in the first half of the day with a reverse test from top to bottom - all this led to the formation of a good entry point into long positions. As a result, when writing the forecast, the pair has already gone up more than 30 points. The nearest target of the bulls is now the resistance of 1.3829.
In the afternoon, the markets should shake the data on the indicator of consumer confidence in the United States and the volume of home sales in the primary market. Given the current market, it is better to stick to the scenario of buying the pound on the decline. If the pair falls against the background of strong fundamental data on the US, the best option for opening long positions will be to protect the support of 1.3789. Therefore, only the formation of a false breakout there in the afternoon will lead to a good entry point into long positions. At the same time, an equally important goal will be a breakthrough of 1.3829, which will already lead to the demolition of several stop orders of sellers who are so counting on a downward correction this week. A reverse test of this level from top to bottom will give you a new entry point and get to new local highs: 1.3864 and 1.3910, where I recommend fixing the profits. The 1.3955 area remains a longer-range target. In the scenario of the absence of active actions on the bulls in the area of 1.3789, the best option for buying the pound will be a test of the next support of 1.3744, just above which the moving averages are playing on the buyers' side. However, I advise you to open long positions there only after a false breakdown. You can watch the GBP/USD purchases immediately for a rebound only from the minimum of 1.3711, or even lower - from the support of 1.3676, counting on a correction of 25-30 points within the day.
To open short positions on GBP/USD, you need:
Sellers have real problems, as all their plans to continue the bearish correction campaign have been covered. The primary task is to return the morning level of 1.3789 under control, because of which the bears started having problems. Only a breakout and a reverse test from the bottom up of this area will form a signal to open short positions, counting on the pair's decline to the lower border of the 1.3744 side channel. It will be very difficult to talk about a breakdown of this level, but if this happens, GBP/USD will quickly fall into the support area of 1.3711, where I recommend fixing the profits. In case of further growth of the pound in the afternoon after the expected weak data on the consumer confidence indicator in the US, I advise you to wait for the formation of a false breakdown in the resistance area of 1.3829 and only then open short positions. Sell the pound immediately on a rebound only from a larger resistance of 1.3864, or even higher - from a maximum of 1.3910, counting on a rebound of the pair down by 20-25 points inside the day.
The COT reports (Commitment of Traders) for October 19 recorded a reduction in short and an increase in long positions, which reflects the upward trend in the pound observed in the middle of this month. It led to the return of the net position of a positive value. Speeches and statements by the Bank of England representatives that it is necessary to take inflationary pressure more seriously also add confidence to buyers of the pound. Last week's speech by the Governor of the Bank of England, Andrew Bailey, was positively received in the market. He once again repeated his position on changing monetary policy. However, a slight slowdown in monthly and annual inflation growth in the UK limited the upward potential of the pair in the middle of the week, which led to its locking in a side channel. I advise you to count on the further strengthening of the pound and take advantage of any decline in the short term, which may form in the case of weak fundamental statistics. The COT report indicates that long non-profit positions rose from the level of 46,794 to the level of 49,112, while short non-profit positions fell from the level of 58,773 to the level of 47,497. It led to a change in the non-commercial net position from a negative value to a positive one. The delta was 1,615, against -11,979 a week earlier. The closing price of GBP/USD increased significantly: from 1.3591 to 1.3735.
Signals of indicators:
Moving averages
Trading is conducted above 30 and 50 daily moving averages, which indicates a return to the market of buyers of the pound.
Note: The author considers the period and prices of moving averages on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
In case of a decline, the lower limit of the indicator in the area of 1.3744 will act as support.
Description of indicators
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