2014-09-02_10-26-17

In contrast to the EURUSD which is in a very narrow trading range today, the GBPUSD is moving, trending and even extending after the impressive ISM data.

The low to high trading range today is now 125 pips. The average over the last 22 trading days (about a month of trading) is 62 pips. Needless to say, the selling has been consistent with little in the way of a correction.

When the market trends lower, the sellers are in control. The market also tends to use the 38.2-50% of the trend “legs” to help define risk. In the chart below the recent trend leg lower took the price from 1.6537 to 1.64897. Stay below the 1.65078-134 and the sellers remain in control. The dip buyers continue to feel the pain. A move above, does not necessarily end the trend, it just neutralizes the market and gives any buyers a reason to breath a little more easily.

Eventually, the tide will turn and/or become more neutralized. That could come on the move above the 38.2-50% outlined above or below at a technical support level.

On the 5 minute chart the 1.6477 is bottom trend line support and the next target (see chart below). On the daily chart, there is multiple reasons for support at the 1.6461 level (see chart above). These areas should slow the move below if the momentum does continue in the direction of the trend.

2014-09-02_10-30-41