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To open long positions on GBP/USD, you need:
The British pound strengthened yesterday following the European currency and returned to its weekly highs, testing them again. But it was not possible to break through this range. As for yesterday's deals, if you look at the 5-minute chart, you will see that in the afternoon you could and should have bought the pound after returning to the level of 1.2552, which I mentioned in my review for the afternoon. This led to a good bullish momentum, but failed to go above the highs of the week, although there were attempts. It is not surprising that bears are protecting this resistance, since so much depends on it. As for the short-term technical picture of the pound, the bulls are focused on a break of resistance at 1.2611, consolidating on it can result in the pair's growth in the area of highs 1.2686 and 1.2744, where I recommend taking profits. Also, do not forget about how buyers are retaining support at 1.2552, where the moving averages are taking place, since forming a false breakout on it will be a signal to open long positions while expecting the bullish trend to continue. If the pair falls below this level, it is best to wait until the low of 1.2500 is updated or buy GBP/USD immediately to rebound from the larger level of 1.2439, where buyers will try to form a new lower border for the ascending channel. Today we will receive new data on COT reports, which may indicate a change in the balance of power in the market. Let me remind you that in the previous COT report, short non-commercial positions increased from 54,799 to 61,449, while long non-commercial positions also increased from 35,810 to 39,192. As a result, the non-profit net position became more negative and was at the level of -22,257 against -18,989, which so far keeps GBP/USD in the medium-term bearish trend.
To open short positions on GBP/USD, you need:
Sellers act with caution, since the pound's growth is more connected with the dollar's weakness due to America's unrest, than with sterling's strength itself. Considering that important data on the US labor market will be released today, pressure on the British pound may return, provided that the reports turn out to be better than forecasts of economists. Bears need to form a false breakout in the resistance area of 1.2611, which will be an ideal signal to open short positions in the pair. This option will be able to return GBP/USD to 1.2552 support, a breakthrough of which will be a very important event for the current short-term outlook. A move below 1.2552 will force many speculative buyers to close long positions, which will lead to selling GBP/USD to the low of 1.2500 and 1.2439, where I recommend taking profits. However, updating these supports will only be considered as a correctional movement within the upward trend of May 18. In case the pound grows further, it is best to return to short positions only after updating resistance 1.2686 or even higher - from a high of 1.2744 while aiming for a downward movement of 30-35 points to end the day.
Signals of indicators:
Moving averages
Trading is above 30 and 50 moving averages, which indicates another attempt by the bulls to build a new momentum.
Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differs from the general definition of the classic daily moving averages on the daily chart D1.
Bollinger bands
A break of the upper border of the indicator at 1.2630 will lead to a new wave of pound growth. In case the pair falls, support will be provided by the lower border at 1.2540.
Description of indicators
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