GBP/USD: plan for the European session on February 11. COT reports. Bulls still hold the initiative, however the momentum

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

Yesterday afternoon, I still waited for the required signal to enter the market, which I spoke about in my morning forecast. Let's take a look at the 5-minute chart and break down the entry point. In the first half of the day, the bulls reached a breakout of resistance at 1.3825 and consolidated there. However, the reverse test of this level did not take place and the pair continued its upward movement. I also placed an emphasis on the 1.3825 level in my afternoon forecast. And closer to when the report on the US economy would be released, the 1.3825 level was tested from top to bottom, which created an excellent entry point into long positions, which subsequently resulted in growth by 40 points. However, we did not reach the target level of 1.3879, which forced us to revise today's technical picture.

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Important fundamental reports will not be released in the first half of the day, so we can't rule out that the bullish momentum, which is gradually slowing down, will continue today. The weekly high should be updated in order to maintain the trend. This requires a breakout and consolidation above the 1.3862 level. A downward test of this area creates an excellent signal to open long positions in order to sustain the bull market, which will then hit a number of major sellers' stop orders and can cause GBP/USD to rise to a high of 1.3909, where I recommend taking profits. More persistent buyers will be waiting for the resistance at 1.3954 to be updated. If the bulls fail to renew their yearly highs, the pressure on the pound could return. Therefore, forming a false breakout in the 1.3820 area will be a signal to open new long positions. The moving averages, playing on the side of the buyers of the pound, also pass there. If traders are not active in the 1.3820 area, then it would be best to wait for a larger downward correction to the support area of 1.3783 and buy the pound there immediately on a rebound, counting on an upward correction of 20-25 points within the day.

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

Bears will try to form a false breakout in the resistance area of 1.3862. This scenario will limit the pound's growth potential and create a new signal for short positions. An equally important task is to regain control of support at 1.3820, which they missed yesterday at the beginning of the European session. A downward correction for the pair has been brewing for a long time, so do not be surprised if, after the price breaks through support at 1.3820, a number of buy stop orders are pulled down and we can see the pound sharply falling to the 1.3783 area. Testing this level from the bottom up creates a good signal to sell GBP/USD in order to renew the low at 1.3732, where I recommend taking profits. If GBP/USD does not quickly fall even after a false breakout forms in the resistance area at 1.3862, then it is best not to rush to sell, but wait for a new wave of growth with an exit to the 1.3909 high, from which you can open short positions immediately on a rebound, counting on a downward correction in 20-25 points within a day. The next major resistance is seen around 1.3954.

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The Commitment of Traders (COT) reports for February 2 revealed an increase in both long and short positions. This time there were more buyers, which led to an increase in the positive delta. The bulls' desperate attempts to surpass annual highs will lead to success sooner or later, so buyers do not lose hope that the bullish trend will continue in February. Each major decline in the pound prompts major players to raise long positions in anticipation of a more active GBP/USD recovery in the future. Long non-commercial positions rose from 47,360 to 53,658. At the same time, short non-commercial positions increased from 39,395 to 44,042, which prevented bears from taking control of the market. As a result of this, the non-commercial net position rose to the level of 9,616 against 7,965 a week earlier. The weekly closing price was 1.3675 against 1.3676. The fact that the bulls held their positions at such a high volatility within the week, once again suggests that the pair is clearly set to overcome annual highs. I recommend betting on the pound's succeeding growth. The demand for the pound will only increase as quarantine measures are lifted, which are expected to be phased out in February this year. The support for the population and the labor market, which will be announced in March, will also have a positive effect on the pound's rate. All the talk about negative interest rates from the Bank of England was postponed indefinitely last week, which allows the pound to spread its wings.

Indicator signals:

Moving averages

Trading is conducted above 30 and 50 moving averages, which indicates a succeeding recovery for the pair.

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 upper border of the indicator in the 1.3862 area will lead to a new wave of growth for the pound. A breakout of the lower border of the indicator around 1.3820 will increase the pressure on the pair.

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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