29.03.202108:15 Forex Analysis & Reviews: GBP/USD: plan for the European session on March 29. COT reports. Further upward correction depends on whether the pound surpasses resistance at 1.3797

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

No interesting signals to enter the market last Friday, as volatility was quite low, and by the end of the day the bulls failed to surpass 1.3797, where everything ended. The 5-minute chart clearly shows how several unsuccessful attempts to rise above resistance at 1.3797 resulted in forming a false breakout and an entry point to short positions, however, it was not a good idea to enter shorts on this signal by the end of Friday's US session. We could see that the market did not go anywhere, and the pair slightly fell in today's Asian session. In general, the picture remains on the side of the bulls.

Recent statements by the UK Treasury Secretary that the UK population no longer needs additional support to stimulate spending caused the pound to appreciate late last week. Considering that Monday promises to be a fairly calm day and sharp fluctuations from the pair are not expected today - the bulls will focus on surpassing resistance at 1.3797, which they failed to do last Friday. Bulls need to protect support at 1.3752 in today's European session, just below which are the moving averages that play on the buyer's side. Forming a false breakout there creates an excellent signal to enter long positions as GBP/USD continues to rise to resistance at 1.3797, where the main emphasis will be placed today. A breakout and consolidation above this level will only strengthen the pound's position, which will lead to a new high of 1.3848, where I recommend taking profits. If bulls are not active in the support area of 1.3752, then it is best not to rush to buy: the best option would be to open long positions immediately on a rebound from the 1.3708 low, counting on an upward correction of 25-30 points within the day. The next big support is seen at the 1.3670 area.

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

The bears' initial task is to regain control of support at 1.3752. Taking into account that the bulls still have the advantage, then only a breakthrough and consolidation below this range, along with being able to test it from the bottom up can create a good signal to open short positions in hopes that the pair would return to a low like 1.3708, where I recommend taking profits. The next target will be last week's low at 1.3670, but we are unlikely to reach it today, especially considering what kind of UK fundamental report awaits us today: the change in the volume of the aggregate M4 of the money supply and the volume of net loans to individuals. In the event of a further upward correction in GBP/USD, then it is best not to rush to sell, but to wait for a false breakout to form around the 1.3797 high, by analogy with the signal that I analyzed a little higher. In case bears are not active in this range, the best option would be to open short positions immediately on a rebound from a high like 1.3858, counting on a downward correction of 25-30 points within the day. The next major resistance is seen at 1.3914.

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

A breakout of the upper border of the indicator in the area of 1.3797 will lead to a new wave of growth for the pound. A breakout of the lower boundary at 1.3760 will increase the pressure on the pair.

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.