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

It is possible that the good times for the pound, expressed in the US dollar's weakness, are coming to an end, so be very careful when making a decision to buy the British pound at current highs. As for yesterday's deals, the possibility of which I mentioned in my review, we should note the persistence and buyers' protection of the 1.2949 level, the test of which from the top down led to forming a signal to buy GBP/USD. If you look at the 5-minute chart, you will see how bulls stubbornly defended the 1.2960 range, and an update to the 1.2949 level, where the support level passed, formed a good entry point into long positions. At the moment, the situation has not changed in any way. If another false breakout forms in the 1.2949 area, you can open long positions in anticipation of continuing the upward trend to the high of 1.3008, which formed yesterday. The resistance of 1.3075 is the long-term goal, where I recommend taking profits. If the pair returns to the 1.2949 level and bulls are not active at this level in the first half of the day, and there is a fairly high probability of forming a downward correction in the pair, it is best to wait for GBP/USD to fall to support 1.2893, or open long positions immediately to rebound from the low of 1.2839 in anticipation of a correction of 30-40 points within the day.

In addition, take note that the Commitment of Traders (COT) reports for July 21 recorded another increase in short and long positions, and it is obvious that there are more bears despite the active opposition of buyers. This suggests that the growth of the market is not due to the British pound's strength, but because of the dollar's weakness. Problems with Brexit and uncertainty about the prospect of economic recovery have not gone away. The COT report indicates that short non-commercial positions increased from the level of 56,761 to the level of 61,310 during the week. Long non-commercial positions rose from the level of 43,175 to the level of 46,230. As a result, the non-commercial net position increased its negative value to -15,080, against -13,568, which indicates the likelihood of a sharp fall in the pound after the US dollar regains strength.

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

Bears will expect the pound to return to the 1.2949 level, which they missed yesterday morning, even if the divergence formed on the MACD indicator. The bears' task for the first half of the day is to return GBP/USD to this range, which will increase pressure on the pound and lead to a decrease in the support area of 1.2893. Consolidating below this level will indicate the beginning of a larger downward correction of the pound in the area of lows 1.2839 and 1.2786, where I recommend taking profits. In case the pair grows further, it is best to wait for a false breakout to form in the resistance area of 1.3008, or sell the pound immediately on the rebound from the larger resistance of 1.3075 based 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 the possibility of the end of the bull market.

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 break of the lower border of the indicator near 1.2965 will increase the pressure on the pound. A breakout of the upper boundary at the 1.3005 area will lead to a larger upward correction in the pair.

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) Fast EMA period 12. Slow EMA period to 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-commercial traders are speculators, 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.