The GBPUSDs first reaction in the early NY session is to extend the narrow trading range to the downside. In the process, the pair is falling below the recent lows from May 6 at 1.5149, from June 1 at 1.5169 and from early September 4 at 1.5156. The low on Friday fell to 1.5134 extending below those lows. Yesterday, the pair held against the 1.5156 level. Trading below that cluster of lows keeps the bears in control.
The range today is 65 pips. The average over the last 22 trading days is 113 pips (about 1 month of trading). It is hard to say there is loads of downside support when a days range is 65 pips and a break of support at 1.5156 leads to a whoop-di-do 16 pip fall. But extensions begin somewhere and looking at the 5 minute chart, the pair is lower - now correcting. So I have to go with that bias. Where does the pair have to stay below to keep the bears happy? I would have liked to keep the 1.5156 as a ceiling (since it was a floor - see below) but that has just been broken. Other than that, stay below the 1.5172 level - 50% of the day's range is a must. The next target on the break of the 1.5134 September low is the 61.8% retracement of the move up from the April low at 1.50849.
Key test time. I can see it going either way but I am sure the sellers want to see something happen soon. The failure to extend below 1.5134. The move back above the old floor at 1.5156 will weigh on sellers if the downside does not reassert itself soon.