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

There were no signals to enter the market yesterday, as it was a holiday in America due to the celebration of Independence Day. Good UK Services PMI data allowed the bulls to build up long positions in the first half of the day, but that was it. If you look at the 5-minute chart, you will see how active the GBP/USD pair's growth is in today's Asian session, which allowed the bulls to go above the resistance of 1.3870, which we will focus on today.

Before talking about further prospects for the GBP/USD movement, let's see what happened in the futures market. There are no particular changes in the Commitment of Traders (COT) report for June 29. Minimum movements in long and short positions indicate a wait-and-see position of traders, which coincides with the Bank of England's position. If at the beginning of the summer one could expect that the central bank would somehow change its attitude to the bond purchase program, then last week Bank of England Governor Andrew Bailey said that there are no problems with inflation so far and now is not the time to cancel stimulus measures. This was the main reason for the problems with the pound's growth. But traders were disappointed with the US labor market report. It was the rise in unemployment that forced traders to close their long positions in the dollar against the pound, which led to a strong bullish momentum at the end of last week, which is likely to continue this one. But as we already know, until serious inflationary pressures are noticed in the UK, the Bank of England is unlikely to rush to make changes to its policy, which will hold back the pound from sharp upward movements. The spread of the Indian strain of coronavirus across the UK poses additional challenges to fully opening up the economy. Despite this, the best scenario is to buy the pound for every good decline against the US dollar. The COT report indicated that long non-commercial positions rose from 51,445 to 51,596, while short non-commercial positions rose from 33,518 to 33,873. As a result, the non-commercial net position declined only slightly, to 17,723 from the level of 17 972. The closing price of the last week decreased and reached 1.3878 against 1.3924.

As I noted above, the bulls managed to pick up resistance at 1.3870 during the Asian session today, which has now turned into support. They will stand with protecting this level in the first half of the day. Good data on the PMI index for the UK construction sector will allow a false breakout in the support area of 1.3870, which will create another signal to open long positions in continuation of the upward trend of the British pound. This scenario may bring the pair back to the 1.3922 area, where I recommend taking profits. An equally important task for the bulls is to regain control of this resistance. Only a breakthrough and consolidation at 1.3922, followed by its test from top to bottom, creates a signal to open long positions in order to recover to 1.3978, where again it will be possible to observe how active the bears are. If the pound is under pressure in the first half of the day, and the bulls will not be able to offer anything in the support area of 1.3870, in this case, I recommend not to rush into long positions. The optimal scenario would be long positions immediately on a rebound from the larger one in the area of 1.3819, above which the moving averages, playing on the side of the bulls, pass. From 1.3819, you can expect an upward correction of 25-30 points within the day.

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

The bears need to do something, as such a bull market will very quickly negate all their efforts to form a powerful downward trend. The first task is to regain control over the 1.3870 level. Only weak fundamental data on the UK economy, or statements by representatives of the Bank of England on monetary policy can push the pound below 1.3870. Testing it on the reverse side generates a signal to open short positions. In this scenario, one can expect GBP/USD to return to support at 1.3819 and then to renew the larger low at 1.3771, where I recommend taking profits. If the bears are not active, the pair can calmly recover to the resistance area of 1.3922, where you can open short positions in the pound immediately on a rebound, counting on a downward correction of 20-25 points within the day. The next major resistance is seen at 1.3978.

Indicator signals:

Trading is carried out above 30 and 50 moving averages, which indicates that the pound can continue to rise in the short term.

Moving averages

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

In case the pound falls, support will be provided by the average border of the indicator in the area of 1.3860.

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.