To open long positions on GBPUSD, you need:
On Monday morning, the British pound fell. However, the bulls quickly took control of the market, forming the lower border of the ascending channel already in the North American session, which I drew attention to in my review yesterday. While trading is above the intermediate support of 1.2933, which acts as the middle of the wide side channel of 1.2890-1.2980, we can expect the pound to return to the maximum of last week in the area of 1.2978 and its update, which will lead to a test of the area of 1.3020, where I recommend taking the profits. Without such a scenario, talking about the long-term advantage of buyers will not be entirely true, especially since the beginning of trade negotiations between the UK and the EU promises to be very problematic. If the bulls do not cope with this task, most likely, the pressure on the pound will return. So, it is best to open new long positions after forming a false breakdown in the support area of 1.2889 or immediately on a rebound from the minimum of 1.2851.
To open short positions on GBPUSD, you need:
The sellers of the pound will try to return in the first half of day the pair under support level of 1.2933, which will increase the pressure on the pound and will update the large level of 1.2889, where I recommend fixing the profit, as there passes the top border of a new upward channel. If the bears manage to break even below this range, the GBP/USD pair will quickly return to the lows of the year in the area of 1.2851, which will indicate a resumption of the downward trend. In the scenario of further growth of the pound during the European session, you can return to short positions on a false breakdown from the level of 1.2978. However, I recommend selling the pound immediately on a rebound only from the maximum of 1.3019.
Signals of indicators:
Trading is conducted just above the 30 and 50 moving averages, which keeps the probability of continuing the upward correction.
If the pair declines, the pound will be supported by the lower border of the indicator around 1.2900. A break of the upper border of the indicator in the area of 1.2950 will lead to a new wave of pound growth.
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
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