...just lower highs. Market is not sure...

This week, there was one heck of a day when the GBPUSD shot higher, with a trading range of 390 pips. That was Tuesday. That was the day that UK PM May announced the she would call an snap election. The goal? To solidify the support for the current government as the Brexit process plays out. The market liked the idea. Win and the mandate is there from the PMs perspective and it may also make negotiations with EU members, easier. The price shot up to 1.29032 - the highest level since October 3rd, and in the process the price exited the "Red Box" in the daily chart below. That box peaked at 1.2774 in December 2016. Breakout? Yes but...

The "but" is that since the spike high, the highs have been progressively lower. The high on Wednesday peaked at 1.28596. The high on Thursday peaked at 1.2846. The high today has peaked at 1.2834.

On the downside, the lows on Wednesday and Thursday could not stay below the Red Box extreme at 1.2774 level. The lows were limited to 1.27687 - just 5 or so pips from that level. Today, that area was broken (yellow area in the chart below), but it was short lived AND stalled right at the 38.2% of the move up from the weeks (Tuesday's) low at 1.2754. The price trades at 1.2795 currently.

The price action is saying that the market is ok with the rally, but there is some apprehension.

What do we need to see from here?

Well, the sellers had a shot to break back lower today. They made a new step lower but could not get below the 38.2% or the 100 hour MA. Do I trust the upside? No. Let's face it the buyers have not been able to get above prior day highs.

For more trust I will need to see a break with momentum.

For the rest of today, I would think that if we go lower (watch a break below 1.2768-74) it would an easier road to travel. Although a short squeeze fear is still out there (I look forward to the COT report later today to see if shorts were squeezed), the buyers have gotten over the panic mode seen on Tuesday. Technically, a move below the yellow area and then the 38.2% AND 100 hour MA would have shorts looking and pushing for more downside.

On the topside for today, a move above 1.2800 -07 is step one. The price closes at 1.2707 an the market likes when it goes from red to black. From there it will not be until we can get above a prior high, that will show the buyers are being more forceful in the upward direction.