Forex technical analysis: GBPUSD falls into the London close, ending an up and down week
Up a little on the week
A week after the surprise election results, the GBPUSD is ending the London session with some selling. For the week the price is up marginally from the 1.2736 close from a week ago. We currently trade at 1.2776.
For the day, the pair has been waffling up and down. There was a mini spike to new highs over the last few hours. The high price stalled just ahead of the 50% retracement of the move down from the June 8 high (pre-election). That level comes in at 1.28058. The high price reached 1.28044. The last 1/2 hour has seen the price rotate back down to an old support area at 1.2768-74. That level was home to a number of swing levels going back to December 2016 (See daily chart below). Admittedly, the area has not been a instrument for a push higher or lower - especially over the last 3 trading days. Instead "the market" has waffled above and below the area. That says to me "the market" is not sold on up or down at the moment.
I can understand why. Over the last week there has been:
- A surprise election with a hung parliament
- Government uncertainty
- Brexit uncertainty (this is a continuous process)
- Economically, retail sales were weaker and the inflation data was higher (at 2.9%).
- The BOE voted 5-3 to keep rates unchanged with 3 dissenters opting for a hike (one is leaving though).
Add to that the horrific fire tragedy that killed 30 (to data) and further dampened spirits in a nation that is still recovering from the tragedy of various terrorist activity.
Yesterday, I wrote in a post that answered my own question "What do we do?", by saying:
"We can take a step aside. If the markets are not behaving the way you expect them to behave, you do have the option to not trade that currency pair (or currency). Don't look to get in a bar room brawl if you don't have to. You can get hurt. "
The hurt as the markets waffle in narrow ranges are not that great, but the choppy action can weigh on you anyway.
Hopefully, next week is a better week and the haze from all the stuff over the last week, starts to clear up a bit, and trading moves back to normal. Like non -trends lead to trends, abnormal leads back to normal. It is all about cycles.....For this week, just let it be....