Key support at 1.2916-25 today and going forward
The GBPUSD trended down from the September 1 swing high at 1.34816 to the September 11 low from last Friday at 1.27614. That move of 720 pips went a long way in a short period of time. A correction was in order.
This week, we have seen a slow march higher. Coming into today, the pair has closed higher on each day (yesterdays gain was a few pips). The price has also been able to get above the 100 and 200 hour MAs (currently both are near each other at 1.2919 and 1.2916 respectively). That is the good news for the buyers.
The not so good news for the buyers is the price has a pretty solid ceiling developed between 1.2993 and 1.3006. Also the pair's high this week is still well short of the 38.2% of the move down this month at 1.30365.
So although there is some bullish overtures on the hourly, there are some cause for pause which may suggest, the move this week is just a modest correction of the larger move lower this month.
The good news is the support and resistance levels are clearly defined.
- On the downside, the 1.2916-25 is home to not only the MAs but also swing levels (see green numbered circles).
- On the topside the 1.2993 to 1.3005 is the ceiling developed this week.
The current price currently trades near 1.2954. That is lower on the day (closed at 1.2970 bid side). A move above intraday would be more positive.
Drilling longer term to the weekly chart, the picture is a little less bearish.
Looking at that chart, the low from last week closed ahead of its 100 week moving average at 1.27437 (the low price extended to 1.2761). The low this week was a touch higher than the low from last week. Not falling below that MA kept the buyers/longs in play and more in control.
The rise to the upside this week has also been able to move back above its 200 week moving average at 1.2927 (green line).
That level corresponds roughly with the MAs and swing levels on the hourly chart between 1.2916 and 1.2925 and increases that areas importance going forward.
So which way are we going?
The price action and the charts look more bearish on the hourly (below the 38.2% and below the ceiling), but is still holding support and above the 100 and 200 hour MAs.
The price action on the longer term weekly chart is move bullish. It has corrected lower in September but held the 100 week MA and is back above the 200 week MA. That is good news for the buyers if those levels can continue to hold going forward.
We have to trust the levels. So if the price can stay above 1.2916-27 area all is ok. A move below, however, would tilt the bias back to the downside on both the hourly and weekly charts.
