GBP/USD: plan for the European session on August 14 (analyzing yesterday's trade). Bears fighting back after Trump's statements.

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

US President Donald Trump's recent claims that the European Union is unfair with regard to trade with the United States has reminded investors of the possibility that duties could be unilaterally imposed on a number of European Union countries, in particular Germany and France. This led to increased pressure on risky assets and also strengthened the US dollar. The pressure on the pair has increased given the fact that the UK itself can not agree on a trade deal with the EU. If we talk about yesterday's deals, only a single signal formed to buy the pound, which did not show anything special. If you look at the 5-minute chart, you will see that after the breakout and consolidation above the 1.3092 level, it was tested from the top down, which formed a good entry point into long positions. However, all bullish growth slowed down in the 1.3125 area, after which the pair returned back to the 1.3092 level, and the pressure on the pound increased. At the moment, the bulls need to protect the support of 1.3047 and a false breakout forming on it will be the first signal to open long positions on the pound. Only this will return GBP/USD to the area of yesterday's resistance of 1.3120. A high at 1.3181 is still the long-term goal for buyers, where I recommend taking profits. In case the pair falls below the 1.3047 area, I recommend postponing purchases until we update a low of 1.2983, the test of which will allow you to demolish a number of stop orders of speculative players, which are located under this week's lows. Afterwards, you can buy the pound there immediately on the rebound in anticipation of a correction of 30-40 points within the day.

Let me remind you that the Commitment of Traders (COT) reports for August 4 recorded significant changes, as traders began to regain long positions on the pound and cut short ones. This suggests that the balance of power is gradually changing again, and investors are more confident that the UK and the EU will be able to agree on a trade deal that will help the economy recover in 2021. The COT report indicates that short non-commercial positions decreased from the level of 64,738 to the level of 60,704 during the week. On the contrary, long non-commercial positions rose from the level of 39,392 to the level of 45,977. As a result, the non-commercial net position again decreased its negative value to -14,727, against -25,409, which indicates a slower fall in the pound after the US dollar regained strength.

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

Sellers need to break below the support of 1.3047, as only a consolidation below this level will be a good signal to open short positions further in anticipation of pulling down the pair to a low of 1.2983. The low of 1.2916 is the long-term goal, where I recommend taking profits. In case the pair recovers even more in the morning, it is better not to rush to sales and wait for a test of major resistance at 1.3120 and sell the pair from there immediately on a rebound, based on a correction of 30-40 points. If there is no rapid movement down from this range, it is better to postpone short positions until the test high of 1.3181.

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Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates the uncertainty of the market with a further direction.

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 around the upper border of the indicator 1.3110. A break of the lower border of the indicator in the area of 1.30300 will increase the pressure on 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) 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.
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