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

In my morning forecast, I paid attention to several levels, from which I gave a clear scenario for action. Let's look at the 5-minute chart and analyze the trade deals. A break and consolidation below the support of 1.3827 and then its reverse test from the bottom up led to the formation of an excellent sell signal for the pound, after which the pair quickly fell below the support of 1.3802, showing a movement of more than 30 points. Immediately after that, as the day before, the bulls quickly regained the level of 1.3802, which led to the formation of a false breakdown and the formation of a signal to buy the pound. After that, there was a big shot of the pair up to the resistance of 1.3862, where I recommended opening short positions in my morning forecast. As a result, another movement up by 60 points, and a reverse movement down by another 30. It was possible to earn somewhere.

From a technical point of view, nothing has changed much, except for a small correction of the nearest support and resistance levels. For sure, important data on retail sales in the United States for June this year will lead to a surge in market volatility. The ideal option for buyers will be a decline in the pound after the retail sales data and the formation of a false breakdown at the level of 1.3794, which now acts as the lower limit of the wide side channel in which the pair spent almost the entire week. Its protection forms a signal to open long positions in the expectation of recovery to the middle of channel 1.3827, where a sell signal was formed today, which I analyzed a little higher. A break of 1.3827 and a test of this area from top to bottom, together with weak data on the US economy, will form a new signal to buy GBP/USD, which will open a direct road to the maximum of 1.3859, where I recommend fixing the profits. The longer-range target remains the resistance of 1.3896. If the pressure on GBP/USD returns in the afternoon, and the bulls will not be able to offer anything in the support area of 1.3794, it is best to postpone long positions until the level of 1.3771 is updated, or you can buy GBP/USD immediately for a rebound, counting on an upward correction of 25-30 points inside the day from the minimum of 1.3743.

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

The initial task of the bears is now to protect the resistance of 1.3827, which they managed to return in the middle of the European session. The formation of a false breakdown will form another good sell signal for the pound, which will push the pair to the support of 1.3794. Its breakdown, together with strong US data, will lead to the demolition of several buyers' stop orders and will collapse GBP/USD to a minimum of 1.3771, which will indicate the formation of a new bearish trend in the short term. A more distant target will be the area of 1.3743, where I recommend fixing the profits. In the absence of active actions of sellers in the area of 1.3827, I recommend postponing sales until the test of a larger resistance of 1.3859, from which the pound has already fallen once today. However, I recommend opening short positions only after the formation of a false breakdown. It is possible to sell the pair immediately for a rebound only after testing the weekly maximum of 1.3896, based on a downward correction of 25-30 points within the day.

The COT reports (Commitment of Traders) for July 6 recorded an increase in both long and short positions, which led to an increase in the net position. Despite the weak fundamental data on the UK GDP growth rate in May this year, the pound continues to be in demand after the correction observed during the June meeting of the US Federal Reserve System. After a major movement of GBP/USD down, traders show particular interest, and the May data is not an obstacle to building up long positions. Everyone is waiting for more active economic growth in the summer period, even despite the Indian strain of coronavirus. However, the pound's growth may be limited not only due to a sharp increase in the incidence of diseases in the summer but the fact that the British regulator will not rush to change the bond purchase program is also a deterrent to the upward trend. While serious inflationary pressure in the UK will not be noticed, the Bank of England is unlikely to rush to change its policy. Despite this, the optimal scenario is to buy the pound with each good decline in pair with the US dollar. The COT report indicates that long non-commercial positions increased from the level of 51,596 to the level of 57,232, while short non-commercial positions increased from the level of 33,873 to the level of 35,329. As a result, the non-commercial net position increased to 21,903 against 17,723. The closing price of last week decreased and amounted to 1.3853 against 1.3878.

Signals of indicators:

Moving averages

Trading is conducted in 30 and 50 daily averages, which indicates the lateral nature of the market.

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 the classic daily moving averages on the daily chart D1.

Bollinger Bands

In case of a decline, the lower border of the indicator in the area of 1.3800 will act as support. In the case of growth, the upper limit of the indicator in the area of 1.3850 will act as a resistance.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). 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 specific 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 the short and long positions of non-commercial traders.