18.02.202109:07 Forex Analysis & Reviews: GBP/USD: plan for the European session on February 18. COT reports. Bears aim to surpass 1.3843 and an upward trend reversal

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

Several signals for entering the market appeared yesterday afternoon. Let's take a look at the 5-minute chart and break down the trades. In my forecast, I talked about buying after the reverse test of the 1.3862 level from top to bottom, which happened. This range was updated just before reports on the US economy were released. And although the upward movement was about 20 points, which made it possible to pull the stop order to no loss, the fundamental report did not make it possible for the pound to get to the monthly high. The breakout and consolidation below 1.3862, followed by a test of this area from the bottom up, created a signal to open short positions in the pound, which caused the pair to fall by another 30 points.

Important fundamental reports on the UK economy will not be released today, so the pound might be under pressure in the first half of the day. Bulls need to try very hard to form a false breakout in the support area of 1.3843, since such a scenario will be the first signal to open long positions. An equally important task for buyers of the pound is to regain control over resistance at 1.3899, just below which are the moving averages that play on the side of sellers of the pound. A breakout and being able to test this level from top to bottom will lead to forming a new signal to open long positions in order to renew the annual high of 1.3949, where I recommend taking profits. Problems may begin in case buyers are not active around 1.3843. In this case, I recommend postponing long positions until the 1.3796 low has been tested, from which you can buy the pound if a false breakout is formed. I recommend holding back from long positions on GBP/USD immediately on a rebound until a larger support at 1.3732 has been tested, counting on an upward correction of 25-30 points within the day.

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

The initial task of the bears is to break and settle below support at 1.3843, which they failed to do yesterday afternoon. A breakout and upside test of this area creates an excellent signal to open short positions in sustaining the pair's fall to the 1.3796 low, the renewal of which will lead to a reversal of the upward trend and form a new bear market. The 1.3732 level will be a succeeding target. In case GBP/USD grows in the first half of the day, then it would be best not to rush to sell, but wait for a false breakout to form in the 1.3899 area. You can open short positions immediately on a rebound from the high of 1.3949, counting on a downward correction of 25-30 points within the day.

The Commitment of Traders (COT) reports for February 9 recorded a sharp increase in long non-commercial positions and a reduction in short ones. This led to a rather strong increase in the positive delta. Bulls are making their way to new highs on good news from UK vaccinations. Last week's UK GDP report only resulted in a larger build-up in long positions, in anticipation of a strong economic recovery in early 2021. Long non-commercial positions rose from 53,658 to 60,513. At the same time, short non-commercial positions decreased from 44,042 to 39,395, which only strengthened the bullish sentiment. As a result of this, the non-commercial net position rose to 21,118, against 9,616 a week earlier. The weekly closing price was 1.3745 against 1.3675. The fact that the bulls held their positions at such high volatility within the week once again suggests that the pair is clearly set to overcome annual highs and quickly return to the 40th figure area by this summer. I recommend betting on the pound's appreciation. As quarantine measures are lifted, which are expected to be phased out in February this year, the demand for the pound will only increase. We are expecting news about the support of the population and the labor market in the UK in March, which is also pushing the pound to growth.

Indicator signals:

Moving averages

Trading is carried out just below 30 and 50 moving averages, which indicates the bears' attempt to seize the initiative.

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 break of the lower border of the channel at 1.3843 will increase the pressure on the pound. A breakout of the upper border of the indicator in the 1.3875 area will lead to a new wave of growth for the pound.

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.