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

Yesterday, the British pound was rather calm in the first half of the day, although the bulls' failure to settle at the highs resulted in a major sell-off in the pair. Let's take a look at the 5 minute chart and talk about what happened. Returning to support 1.3870 in the first half of the day and its subsequent test led to a breakthrough of this level. Therefore, a signal to open long positions was not generated. There were no short positions either, since I did not wait for a reverse test from the bottom up to the level of 1.3870. All this led to a revision of the pair's technical picture.

The afternoon was much more interesting. The 1.3871 level was updated from the bottom up and a false breakout was formed there along with a signal to open short positions, which resulted in a large sale to support 1.3836. A similar story happened there. After the test of this area from the bottom up, another signal to open short positions was formed, which pushed the pound down to a low like 1.3799. The downward movement from the first entry point was about 70 points. Buying on the rebound from the 1.3799 level did not bring much results.

The UK will not report anything interesting today, except for house prices, which are unlikely to have a significant impact on the foreign exchange market. Therefore, the pressure on the pound may persist in the first half of the day. The best option for the bulls will be to form a false breakout at the level of 1.3771, which generates a signal to open long positions in hopes of a recovery to resistance at 1.3810. Only the breakthrough of 1.3810 and the test of this area from top to bottom can create a new signal to buy GBP/USD and open a direct road to the 1.3862 high. Moving averages are just above the level of 1.3810, which can prevent the bulls from quickly taking the market back under their control. The next target will be the 1.3922 high, where I recommend taking profits. If the pressure on GBP/USD persists in the first half of the day, and the bulls are not active in the 1.3771 area, it is best to postpone long positions until the support at 1.3732 is renewed, but I also recommend opening long positions from there only if a false breakout is formed. I recommend buying the pair immediately on a rebound only from this month's new low in the area of 1.3674, counting on an upward correction of 25-30 points within the day.

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

The initial task of the bears is to protect resistance at 1.3810. Forming a false breakout there will be a sell signal, which will return the bearish nature to the market and push the pair to support 1.3771. Quite a lot depends on the breakdown of this level, as the exit below it can form a new downward trend for the pair. Also, there are a lot of bulls' stop orders below 1.3771, traders who still believe that the pound will continue to rise. A reverse test of 1.3771 from the bottom up will result in creating another entry point into short positions, for the purpose of pulling down the pair to 1.3732. The next target will be the new local low at 1.3674, where I recommend taking profits. If the bears are not active in the resistance area of 1.3810, I recommend postponing short positions until the test of a larger high at 1.3862, where you can open short positions immediately on a rebound, counting on a downward correction of 25-30 points within the day.

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.

Indicator signals:

Trading is under the 30 and 50 moving averages, which indicates an attempt by the bears to regain control of the market.

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

Surpassing the average border of the indicator in the area of 1.3810 can push the pound to rise. In case the pair falls, support will be provided by the lower border of the indicator in the area of 1.3770.

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.