To open long positions on GBP/USD, you need:
A false breakout in the support area of 1.1470, which is clearly visible on the 5-minute chart, after the Bank of England reduced interest rates to the level of 0.1%, indicates the presence of large buyers in the market. However, they will not be able to hold the 1.1470 area indefinitely, so an important task of the bulls is to return the resistance to 1.1667, which will lead the pound to grow to a high of 1.1778, getting above which will be quite problematic. In the scenario of a downward correction, and do not forget that the bear market persists, and nothing much has changed, it is best to return to long positions only at a false break of the level of 1.1563, or after another test of the year’s low of 1.1470. Do not forget about placing stop orders, as a break in this area will lead to a new major sell-off of GBP/USD.
To open short positions on GBP/USD, you need:
Sellers yesterday showed themselves very well in the afternoon from the resistance of 1.1740, where I recommended opening short positions, which caused the pound to fall to the area of this year’s lows and to their renewal. Now the task of sellers is to hold the resistance of 1.1667, and the formation of a false breakout on it, in a place with weak fundamental data for the UK, will lead to another return of GBP/USD to the support area of 1.1563, and it is quite possible to the 6th test of the low of 1.1470. A break in this area will resume a strong bearish trend for the pound in order to update the round figures 1.1400 and 1.1300, where I recommend taking profits. In the scenario of growth above 1.1667 in the first half of the day, bears will count on sales from the resistance of 1.1778. If there is no volume after testing this area, it is best to postpone short positions until the high of 1.1911 is updated.
Signals of indicators:
Trading is carried out in the region of 30 and 50 moving average, which indicates the formation of the side channel and the likelihood of an upward correction of the pound.
In the event of a decline, support will be provided by the lower boundary of the indicator at 1.1440. Growth will be limited by the upper boundary of the indicator in the area of 1.1730.
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.
The material has been provided by InstaForex Company – www.instaforex.com