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

In the first half of the day, several fundamental reports were released, which indicated the weakness of the UK economy, or rather its growth rate after the coronavirus crisis. This fact did not allow buyers to get above the resistance of 1.2966 and formed a false breakout there with a convenient entry point for short positions. I marked this moment on the 5-minute chart. However, it did not reach a major sell-off, which preserves the further prospect of growth of the British pound in the second half of the day.

An important task for buyers of the pound is to break through and consolidate above the resistance of 1.2966 since only after that it will be possible to talk about the advantage of buyers, which will form an additional entry point into long positions with the main goal of updating this week's maximum in the area of 1.3027, where I recommend fixing the profits. The longer-range target remains the range of 1.3089. If the pair declines in the second half of the day, the bulls will have to think about protecting the support of 1.2901, which was formed yesterday in the first half of the day. Only the formation of a false breakout at this level will be a signal to open long positions in the hope of restoring the pound to the resistance area of 1.2966. If buyers of the pound do not show activity in the support area of 1.2901, it is best not to rush with purchases, but wait for the update of the larger minimum of 1.2848, where you can open long positions immediately for a rebound in the expectation of correction of 30-40 points within the day.

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

Sellers of the pound did everything necessary, however, it did not lead to a major sale, even against the background of such weak statistics. As long as trading is conducted below the resistance of 1.2966, we can expect a further decline in GBP/USD to the support area of 1.2901. Only a consolidation below this range will return a bearish impulse to the market, which can collapse the pair to the week's minimum of 1.2848, below which the levels of 1.2807 and 1.2749 open, where I recommend fixing the profits. If the bulls manage to take the resistance of 1.2966 in the second half of the day, sales are better not to hurry and to wait for the updates to a fresh weekly high at 1.3027 area and sell the pound out on the first test based on the correction of 30-40 points intraday.

Let me remind you that the COT reports (Commitment of Traders) for September 29 recorded a sharp increase in short positions and a reduction in long ones, 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 an increase in the level in the expectation of uncertainty with 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. During the reporting week, there was an increase in short non-commercial positions from the level of 40,523 to the level of 51,961. Long non-commercial positions decreased from level 43 to level 487 39 216. As a result, the non-commercial net position became negative and amounted to -12,745 against 2,964 a week earlier, which indicates a gradual return of the market to their control by large sellers.

Signals of indicators:

Moving averages

Trading is conducted in an area of 30 and 50 daily averages, which indicates an active confrontation between buyers and sellers.

Note: The period and prices of moving averages are considered by the author on the hourly chart H1 and differ from the general definition of classic daily moving averages on the daily chart D1.

Bollinger Bands

A break of the upper limit of the indicator in the area of 1.2965 will lead to a new major wave of growth of the pound. A break of the lower limit of the indicator in the area of 1.2940 will increase the pressure on the pair.

Description of Moving average indicators

• 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.
• The MACD indicator (Moving Average Convergence/Divergence — convergence/divergence of moving averages). Quick EMA period 12. Slow EMA period to 26. The 9 periods SMA.
• Bollinger Bands (Bollinger Bands). The period 20.
• Non - profit 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 total non-commercial net position is the difference between short and long positions of non-commercial traders.