Buying the dip
The GBPUSD had a pretty nice surge higher today after bottoming near the 100 hour MA (blue line in the chart below - low came in at 1.5446 vs 1.54403 MA level) and surging toward the 50% retracement of the move down from the June 18 high at 1.56277 (high came in at 1.5625).
Risk defining support buyers below. Risk defining resistance sellers above.
The price has been consolidating since peaking against the 50% retracement level shortly after the weaker US retail sales report. The correction lower stalled right at the 38.2% of the surge higher. So far, the technical levels are holding the line, the bulls are more in control, but sellers showed their hand at the 50% retracement level.
The range today is an oversized 179 pips. The average over the last 22 trading days is 122 pips. So the average was beaten by 57 pips. Hence when we hit the peak and good resistance level, traders were willing to part with some of the position and take some profit.
Fundamentally, Carney gave traders a bit to think about from an earlier tightening perspective. It might be that it comes down to "if the US moves, we will not be far behind". However, there are a lot of uncertainty in that argument. The US retail sales continue to disappoint. .
The focus will turn to Yellen tomorrow. Last week she said that she expects to raise rates in 2015. But she also expressed her usual concerns about a lot of things. So there is risk for her words and the market is anxious to hear more details from the Chair.
BOE Miles speaks at 1 PM. He is typically a dove.
