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To open long positions on GBP/USD, you need:
In the first half of the day, several signals were formed to enter the market. I suggest you look at the 5-minute chart and figure out the entry points. In my forecast, I advised opening short positions when forming a false breakdown from the level of 1.3755 - which happened. An unsuccessful attempt to grow above 1.3755 ended with a sell signal for the pound, which, unfortunately, brought losses, as after a while there was a shot above 1.3755 and the removal of stop orders. Then the pair smoothly returned under 1.3755, and its bottom-up formed another entry point into short positions. After a slight downward movement of 17 points, trading again moved to the area of 1.3755. In the afternoon, the technical picture was completely revised.
The main focus now is on data on the American economy, namely on the report on GDP growth rates for the 3rd quarter of this year. If the data exceeds economists' forecasts, it will certainly lead to a strengthening of the US dollar, as it will increase the chances of an earlier increase in interest rates by the Federal Reserve System next year. Economic growth will also contribute to an increase in inflationary pressure, which is already quite high in the United States. For us, as intraday traders, it is now important to protect the intermediate support of 1.3740. The most optimal option for opening long positions will be the formation of a false breakdown in this range, which forms an excellent entry point to buy in the continuation of the upward correction of the pound. At the same time, an equally important task will be the breakthrough of 1.3772, above which it was not possible to get out yesterday. Only this scenario will lead to the demolition of several speculative stop orders of sellers counting on a further downward correction of the pair this week. The reverse test of the 1.3772 level from top to bottom will allow you to get to the maximum of 1.3802, and there it is already very close to a larger weekly resistance - 1.3830, where I recommend fixing the profits. The 1.3864 area will be a more distant target, but it is still very early to talk about this. In the scenario of a decline in the pair and the absence of active actions on the part of the bulls in the area of 1.3740, the best option to buy the pound will be a test of the next support of 1.3712, which acts as the lower boundary of the side channel observed since the middle of this week. However, I advise you to open long positions there only after a false breakdown. It is best to watch GBP/USD purchases immediately for a rebound only from the minimum of 1.3672, or even lower - from the support of 1.3632, counting on a correction of 25-30 points within a day.
To open short positions on GBP/USD, you need:
Sellers are still in no hurry to enter the market and are counting on strong statistics on the American economy, as there are no other reasons for the fall of the British pound at the moment. Only the formation of a false breakdown of around 1.3772, together with strong US GDP data, will return real pressure on GBP/USD and form an excellent entry point into short positions in the continuation of the bearish correction. The next target of sellers will be the 1.3740 level. Only a breakthrough and a reverse test from the bottom up of this area will give a signal to open new short positions in the expectation of a decline in the pair to the area of 1.3712, where sellers may start having problems again. A break of 1.3712 will lead to the demolition of several bulls' stop orders, which will collapse the pound already in the area of 1.3672 and 1.3632, where I recommend fixing the profits. In the case of GBP/USD growth in the afternoon, and while everything is going to this, the lack of bear activity in the 1.3772 area will lead to an instant breakthrough of this level. In this case, it is best not to rush with sales, but to wait for the formation of a false breakdown in the area of the next resistance of 1.3805. I advise selling the pound immediately for a rebound only from the weekly maximum of 1.3827, and then, counting on the pair's rebound 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 representatives of the Bank of England 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. This 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 around 30 and 50 daily moving averages, which indicates some market uncertainty with the further direction of the pair.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger Bands
A breakthrough of the lower limit of the indicator in the area of 1.3730 will lead to a fall in the British pound.
Description of indicators
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