The GBPUSD broke out two days ago, rising above the 100 day MA for the 1st time since May 21st (see daily chart above). Yesterday, the market consolidated, then rallied sharply with the dollar selling post FOMC.
Today, the pair stretched to the 61.8% of the move down from the end of April high at the 1.59052 level (high reached 1.59105), but the price has since fallen and is now down on the day (close at 1.5876). The pair is taking a breather. Stay below the close from yesterday and the downside correction remains alive.
The 38.2% retracement move higher from yesterday’s consolidation low comes in at the 1.58545. This level, and the broken parellel trend line at the 1.5846 are the target support levels for the pair today. Move below, and the larger correction can be expected (1.5837 and 1.5816 the next targets).
The low to high trading range is still a lite 51 pips. So there is room to roam. IF there is an extension to the support target, the range will only extend to 63 or so pips (average is 110 pips over the last 20 days). Nevertheless, the burden of proof is on the sellers to take it below that support area. Failure to do so and the bulls remain in control and the shorts are likely to be scared into buying.
