GBP/USD: plan for the European session on September 2. COT reports. Pound stuck in a horizontal channel, but bulls are persistent

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

A good signal to sell the British pound was formed, but it never came to fruition. Let's take a look at the 5 minute chart and talk about what happened. You can clearly see how the bears are forming a false breakout at 1.3756, which creates a signal to sell the pound, but I did not wait for a major downward movement. Closer to the US session, after the release of weak data on the US labor market, the bulls managed to knock down stop orders and the pound returned to weekly highs. However, there they received a very strong rebuff from the bears. After surpassing 1.3669, the reverse test of this area from top to bottom for forming a buy signal did not take place, therefore, there was no entry point.

There are no important fundamental statistics on the UK today, so trading will continue to remain in the wide horizontal channel at 1.3731-1.3791, going beyond which will determine the pair's succeeding direction. The bulls need to settle above resistance at 1.3791, which was formed at the end of yesterday. Only a test of this level from top to bottom can create a good entry point into long positions with the goal of entering a new weekly high at 1.3826 and then at 1.3868, where I recommend taking profits. The next target is 1.3904, which is the monthly high. In case GBP/USD falls in the first half of the day, the optimal scenario will be long positions from the level of 1.3758, but only if a false breakout is formed there. There are also moving averages, playing on the side of the bulls, which can help the pound with continuing the upward correction. If the pressure on GBP/USD returns in the first half of the day, and the bulls are not active in the support area of 1.3758, the optimal scenario will be long positions from the lower border of the 1.3731 channel. You can also buy the pound there but only after forming a false breakout. It is possible to open long positions in GBP/USD immediately on a rebound in the area of 1.3694, or even lower - from 1.3645, 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 initial task of the bears is to protect resistance at 1.3791, which coincides with the upper border of the horizontal channel. Considering that there are no important fundamental reports in the first half of the day, the optimal scenario for opening short positions is to form a false breakout at this level, which will weaken the pound's position and push the pair towards the middle of the horizontal channel at 1.3758, where the moving averages are running on the side of the bulls. 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 1.3731, and there it is near the new low at 1.3694, where I recommend taking profits. If the bears are not active around 1.3791 in the first half of the day, I advise you to postpone selling until a new major resistance at 1.3826. 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 around 1.3868, 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 above 30 and 50 moving averages, which indicates an attempt by the bulls to take the initiative.

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 breakout of the lower border of the indicator in the area of 1.3758 will lead to a new wave of decline in the pound. A breakthrough of the upper border of the indicator in the area of 1.3791 will lead to a new wave of growth of 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.
The material has been provided by InstaForex Company - www.instaforex.com

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