GBP/USD: plan for the European session on July 29 (analysis of yesterday's trade). Pound continues to rise, ignoring all

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

After a short pause in the first half of the day, the British pound still managed to break above the resistance of 1.2899, which caused the bullish trend to resume and led to renewing the next monthly highs. If you look at the 5-minute chart, you can see how the pair breaks above the 1.2899 resistance on the second attempt and gets pinned on it, which leads to a new wave of growth. At the moment, the bulls should break through and consolidate above the resistance of 1.2949, but there is a possibility of a divergence on the MACD indicator that will limit the upward potential in the first half of the day. Therefore, only a real consolidation above 1.2949 with a test of this level from top to bottom on the volume will form a signal to open long positions, which can lead to an update of the highs of 1.3025 and 1.3075, where I recommend taking profits. A more correct and safe entry point to long positions is a false breakout forming in the support area of 1.2893, where the moving averages pass. Otherwise, I recommend buying GBP/USD immediately for a rebound from the low of 1.2839, or from the larger support of 1.2786, while expecting a rebound of 30-40 points within the day.

You should take note that the Commitment of Traders (COT) reports for July 21 recorded another increase in short and long positions, and it is obvious that the bears are growing in numbers despite the active opposition of buyers of the pound. This suggests that the growth of the market is not due to the strength of the British pound, but because the US dollar is weak. Problems with Brexit and uncertainty about the prospect of economic recovery have not gone away. The COT report indicates that short non-commercial positions increased from the level of 56,761 to the level of 61,310 during the week. Long non-commercial positions rose from the level of 43,175 to the level of 46,230. As a result, the non-commercial net position increased its negative value to -15,080, against -13,568, which indicates the likelihood of a sharp fall in the pound after the US dollar recovers its strength.

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

Sellers still have problems, and the downward correction from yesterday morning only led to forming a new wave of growth. Now another divergence is forming on the MACD indicator, forming a false breakout in the area of 1.2949 after updating yesterday's highs will be a signal to open short positions on the pound. Otherwise, it is best to postpone the sale of GBP/USD until the high of 1.3025 has been tested, or until the update of the larger level of 1.3075 based on a correction of 30-40 points within the day. An equally important task for the bears is to return GBP/USD to the support level of 1.2839, where the moving averages are also held. Consolidating below this range forms a good entry point into short positions that are capable of updating the lows of 1.2839 and 1.2786, where I recommend taking profits.

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Indicator signals:

Moving averages

Trading is carried out just above the 30 and 50 moving averages, which indicates a continuation of the bull market.

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 D1 daily chart.

Bollinger Bands

Growth will be limited by the upper level of the indicator in the area of 1.2960. In case the pair falls, the first rebound will be noticeable after the test of the lower boundary of the indicator in the area of 1.2880.

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 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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
  • Bollinger Bands (Bollinger Bands). Period 20
  • Non-commercial traders are speculators, 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 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