Correction into London close sees the price move back lower on the day
The GBPUSD corrected lower after the London fixing and has now moved below the closing level from yesterday at the 1.5773 level. The high from yesterday at the 1.5812 level has held resistance at the high. The high today peaked at 1.58076 - less than 5 pips from that level The move back into the negative side, will now look toward the 50% of the range as intraday support. But let's be honest, the flows now are likely position squaring and weekend influenced. Next week will traders will reevaluate.
Having said that, what does the longer term view look like for the pair?
Looking at the daily chart, the 50% of the move down from the July 2014 high to the April low comes in at 1.58794. This is a major target for the pair on the topside. Obviously, there will need to be a break above the highs from yesterday and today to contend with first. .
On the bullish side, the price this week was able to break above the 200 day MA (green line in the chart below). That was the first break above the MA since August 2014. On Wednesday, the corrective low came in at 1.5632 (the 200 day MA was at 1.5628). Nice hold. Going forward, if the price is to move lower, the 200 day MA will be key.
Action today from the perspective of the hourly chart, was a bit of a fake out. The price held topside resistance trend line yesterday and fell below the lower trend line. That did turn the tide to more bearish early on. The low price sniffed the 100 hour MA (see post and blue line in the hourly chart below). However, as we now know, when the US data disappointed, the dollar reversed - the squeeze was on.
The GBPUSD has still moved 725 pips in 8 trading days. So the move may be over bought, but the sellers are once again required to show they have the power to take back some control. The move below the closing level is a step, but with the weekend approaching, the real proof will come next week. The rising 100 hour MA will be a level to eye on the downside. On the topside, the double top will be the 1st hurdle followed by the 50% retracement level at the 1.5879.
