Back in volume area from end of July/beginning of August

The GBPUSD has been muddling along in trading today - finding support buyers against support and resistance sellers against resistance (that is a bit redundant isn't it?). The support I speak of comes near swing low levels that provided a floor from July 30-August 4. The resistance came against a topside trend line connecting recent highs on the hourly chart (see chart below). Looking at the chart there are a number of green (for up) and red (for down) bars. The close yesterday came in at 1.5589. So with the price below that level currently that is a little negative. Arguing the bullish case, we have not had a close below the 200 hour MA ( green line in the chart below at 1.5571 currently) over the last 7 hours. The low to high trading range is only 60 pips so far. The average over the last month is 108.

Technically, the picture is probably a bit more bullish.

  • The market had a 3 day look below the 1.5550 area and could not keep the sellers engaged
  • The price moved above the 100 hour MA yesterday and surged higher.
  • The 200 hour MA was broken today in the Asian Pacific session, but has trade above that moving average level, over the last 7 hours (green line at 1.5571 currently - the price is trying to move below now)
  • Looking at the daily chart below, the GBPUSD, the pair has been consolidating in very narrow trading range over the last month (1.5423 to 1.5689 or 276 pips). To give you an idea of the non trending nature of that range, there there has not been a calendar month that has had a range less than 276 pips since 2002. The price remains above the 100 and 200 day MAs (which are converged)

When the market non- trends, we know it will eventually trend (non trending transitions to trending). So traders should start to anticipate a trend-like move. What might be a catalyst? Employment will be released in the UK on Wednesday...Maybe. Often it can it just be a technical break. Watch 1.5557 area below (the lower yellow area in the chart above) and then the 100 hour MA (blue line in the chart above). If the price is to turn this bullishness around further, a move below and staying below these support levels will be needed. On the topside getting above the topside trend line (see red circles) and then above the 1.5644 area, will be technically bullish (and perhaps a catalyst for increased momentum).

The point is, the market cannot non trend forever. So start to anticipate something to kick start the next move.