The GBPUSD was encouraged by much better Manufacturing data today but when the price could not extend above the highs from last Friday after moving above the 100 hour MA (blue line in the chart above) for the 1st times since July 4th and topside trend line, the sellers took back control (say…”FAILURE”).
The price is following the EURUSD lower in the early NY hours and looks toward a 100% retracement of the move higher at the 1.5494 level (although lagging a bit as EURGBP moves lower). Trend line support at 1.5486 looms not far behind the level. The low from last week comes in at 1.5459. 61.8% of the move up from the June 1 low comes in at 1.5461 (see daily chart below). So there is a lot of support to contend with on the downside for the pair.
On the topside, I will be watching the retracements for clues that the momentum can continue and the sellers can remain in control. The midpoint of the most recent leg down comes in at 1.55129. The 100 and 200 bar MA on the 5 minute chart are converged at the 1.55178 level. Shorts today in the pair would not want to see the price move back above these levels. If so, I think the shorts would give up and the up and down activity will likely continue.
