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

If the Minister of Foreign Affairs of Ireland caused the pound to fall on Wednesday, then yesterday, Bank of England Governor Andrew Bailey distinguished himself, who once again unambiguously hinted at introducing negative interest rates in the near future. As for the deals, after buying the pound in the morning, which we analyzed in detail in yesterday's forecast, a signal to sell the pound was generated during the US session. But it turned out to be less effective. If you look at the 5-minute chart, you will see how the bears went beyond the area below 1.2929 and then tested this level from the bottom up, forming a good short entry point after a false breakout. However, there was no major downward movement from this area, and then the market returned to the buyers' side altogether.

Now an important task for the pound buyers is to break through and settle above resistance at 1.2966, after that we can talk about an advantage for the buyers, which forms an additional entry point into long positions with the main goal of updating this week's high at 1.3027, where I recommend taking profits. The 1.3089 area is a distant target. In case the pair falls in the morning, and today we have a rather important report on the UK GDP, the bulls will have to think about protecting support at 1.2901, which appeared yesterday morning. Forming a false breakout at this level will be a signal to open long positions while expecting the pound to recover the resistance area of 1.2966. If buyers of the pound are not active in the support area of 1.2901, then it is best not to rush into buy positions, but to wait until a larger low at 1.2848 has been updated, where you can open long positions immediately on a rebound, counting on a 30-40 point correction within the day.

The Commitment of Traders (COT) reports for September 29 recorded a sharp rise in short positions and a reduction in long positions, which affected the net position and led to its larger negative value. This once again confirms the desire of traders to build up short positions with any growth in the level, counting on uncertainty over Brexit and the prospects for the recovery of the British economy. The pressure on the pound will gradually increase as the second wave of coronavirus spreads. Short non-commercial positions increased from 40,523 to 51,961 during the reporting week. Long non-commercial positions decreased from 43,487 to 39,216. As a result, the non-commercial net position became negative and reached -12,745, against 2,964 a week earlier, which indicates that control over the market is gradually returning to large sellers.

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

Sellers of the pound will fight for the market again, and a number of important fundamental statistics, which Britain will release today, can provide help. First, you need to protect resistance at 1.2966, where forming a false breakout will be the first signal to open short positions in the support area of 1.2901, a breakout of which will be an equally important target. Settling below 1.2901 will return the bearish momentum to the market, which can pull down the pair to the week's low at 1.2848, below which levels 1.2807 and 1.2749 are open, which is where I recommend taking profits. If the bulls manage to pick up resistance at 1.2966 in the first half of the day, then it is better not to rush to sell, but to wait for a new weekly high near 1.3027 and sell the pound from there on the first test, counting on a correction of 30-40 points within the day.

Indicator signals:

Moving averages

Trading is carried out in the area of 30 and 50 moving averages, which indicates market uncertainty with the succeeding 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 daily D1 chart.

Bollinger Bands

A breakout of the upper border of the indicator in the 1.2966 area will lead to a new wave of growth for the pound. In case the pair falls, support will be provided by the lower border of the indicator in the 1.2901 area.

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.