GBP/USD: plan for the European session on September 1. COT reports. Pound bulls did not fulfill the assigned tasks. Bears

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

Several interesting short entry points for the British pound were formed yesterday. Let's take a look at the 5 minute chart and understand the trades. In the first half of the day, after an unsuccessful consolidation above the resistance of 1.3792, the first signal was formed to open short positions in the pound in hopes that the pair would fall in the short term. As a result, the downward movement was about 30 points, but we did not reach the level of 1.3752. A similar story happened in the second half of the day, when after a false breakout in the 1.3792 area, the pair collapsed to the support area of 1.3752, and then the trade completely moved under this level, canceling all the bulls' hopes for continued growth.

This morning we will receive the PMI report for the manufacturing sector in the UK in August, where we expect it to remain unchanged compared to the preliminary estimate, so the pressure on the pound may remain in the morning. In order to continue the upward trend, which is one step away from the end and the market's movement into a wide horizontal channel, the bulls need to settle above resistance at 1.3756 in the first half of the day, which they missed yesterday during the US session. Only a test of this level from top to bottom can create a good entry point into long positions with the goal of entering 1.3792, and with the prospect of updating 1.3827, where I recommend taking profits. The 1.3868 level is still a target, from which about 70 points will remain to the monthly highs. In case GBP/USD falls in the first half of the day, the optimal scenario will be long positions from the level of 1.3717, but only if a false breakout is formed there. If the pressure on the pound persists, and the bulls show nothing in the support area of 1.3717, the optimal scenario will be long positions from the 1.3682 low, but only after forming a false breakout. This area will act as the lower border of the new horizontal channel. It is possible to buy GBP/USD immediately on a rebound in the area of the 1.3645 low, counting on an upward correction of 15-20 points within the day.

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

The bears' goal is to protect resistance at 1.3756, above which the moving averages, playing on their side, pass. The optimal scenario for opening short positions will be a false breakout at this level, which will weaken the pound's position even more and push the pair towards the middle of the horizontal channel at 1.3717, which was clearly visible at the end of last week. A breakthrough and test of this area from the bottom up will create another entry point into short positions, which will push GBP/USD even lower - to 1.3682, and there it is near the 1.3645 low, where I recommend taking profits. If the bears are not active around 1.3756 in the first half of the day, I advise you to postpone selling until yesterday's large resistance at 1.3792. I also recommend opening short positions from there only if a false breakout is formed. Selling GBP/USD immediately on a rebound is possible from a new weekly high in the 1.3827 area, counting on a downward correction of 25-30 points within the day.

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I recommend that you familiarize yourself with:

The Commitment of Traders (COT) reports for August 24 showed that long positions decreased and short ones sharply rose, which significantly affected the delta. However, all these changes do not take into account Federal Reserve Chairman Jerome Powell's speech from last Friday, who with his statements had dashed any hope that the US dollar would further strengthen this fall. Obviously, the positions of the bulls have changed a lot and I do not recommend giving serious attention to the current COT report. Considering that for the entirety of last week we have not seen any important fundamental statistics on the UK, it is obvious that the bulls will grab any opportunity to build up long positions, counting on good summer reports and a new round of strengthening of the British pound in the medium term. However, the fact that representatives of the Bank of England are in no hurry to talk about changes in monetary policy affects the activity of traders. I advise you to continue with the strategy of buying the British pound in case we observe any good decline. The lower the pound falls, the more active buyers of risky assets will begin to show themselves, betting on real changes in the monetary policy of the BoE in the future. The COT report showed that long non-commercial positions fell from 41,898 to 39,489, while short non-commercial positions jumped from 37,247 to 56,234, indicating an advantage towards the bears, but in fact this is not true right now. As a result, the non-commercial net position decreased and reached -16,746, against 4,651 weeks earlier. Last week's closing price dropped to 1.3723 against 1.3840.

Indicator signals:

Moving averages

Trading is carried out below 30 and 50 moving averages, which indicates a likely decline in the pound in the short term.

Moving averages

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 breakthrough of the lower border of the indicator in the area of 1.3720 will lead to a new wave of decline in the pound. In case of growth, the upper border of the indicator in the area of 1.3790 will act as a resistance.

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.
The material has been provided by InstaForex Company - www.instaforex.com

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