The last two days are trying to close higher, but..

The GBPUSD has been lower on the day on 11 of the last 12 days. The exception was on Monday when it closed higher. The move over that time period has taken the price down about 580 pips from the high to the low reached on Tuesday (since Dec 11 it has moved around 890 pips lower). Yes...Tuesday. Despite being down yesterday and flirting with being down today, the low from Tuesday at 1.4351, has not be broken. There is consolidation going on.

Does that consolidation mean a correction higher is around the corner?

It is a step in the correction direction.

But there still has to be more. After all, the low was 1.4351, the current price is 1.4405. We have been going up and down since bottoming. I would not call what we have seen anything but a consolidation....not a correction.

So what other clues can we find to support more of a correction higher.

How about a close higher on the day.

That would make sense. At least it is a start. Yesterday the close came in at 1.4405. The price is at 1.4405 currently. We have been higher today, but moved back lower. We are trying to get above it right now. Closing higher may give traders more of a reason to think the same thing and collectively create a group push in the upward direction.

What else?

How about something that should not happen if we are to go higher. Looking at the 5 minute chart above, the 1.4377 to 1.43855 area has a number of swing lows over the last few days. So why don't we define risk there. If the price does not trade below those swing lows, that would imply buyers on dips. It also implies if we cannot go lower we can go higher. Defining a low floor is good. Doing so sets the parameters for a stop loss. That is VERY IMPORTANT - especially in a trending market.

Looking at that 5-minute chart above, we are also back above the 100 and 200 bar MA. Should we jump up and down? NO, the price has traded above and below those moving averages today and yesterday as well. However, often times the market bases and rallies off MA levels. In addition, the last move below those lines, held in that yellow zone...So maybe, just maybe, the correction higher is just getting started.

What else.

Well how about getting above a retracement level, a trendline or above a longer moving average - like the 100 hour moving average?

Looking at the hourly chart below, the 38.2% retracement of the move down from Monday's high to Tuesday's low comes in at 1.44477. A move above that would be positive. Above that is the 100 hour moving average. That's the blue line in the chart below. The 100 hour moving average (at 1.4473 currently) is snaking down along with a trend line that started on December 29 and has 4 different points on it (see red circles). Finally the 50% retracement of the weeks trading range comes in at 1.4477. The cluster of resistance in that area from those 3 things would be bullish if broken.

If you are looking, thinking, sniffing about a correction, you need to have clues that will tell you it is indeed happening. It is also a confirmation that other traders are going along with you. The only way, we can truly know is by monitoring price action and the technical tools applied to the price moves. If those technical levels cannot be breached, there is no correction. In fact, your stop will likely be triggered instead.

In summary, if you are looking for a correction of a trend move, defining risk is an important step. At least you know where you are wrong and can stop yourself if the trend starts to restart.

The next steps involved finding positive reinforcement from getting through technical hurdles that help tell you there is a chance. Drilling down into shorter term, intermediate and longer term charts can create a roadmap for you to follow into the open road ahead.

One BIG warning....The risk defining step is important as trends are fast, directional tend to go further than you expect. Trading against them can be detrimental to your trading account. So be sure to not ignore your risk defining level. 11 out of 12 can easily become 12 out of 13 and more. Be disciplined.