200 day MA and 38.2% retracement
The GBPUSD took the ball and ran.
Fundamentally, industrial production surprised to the upside, but that came later.
Technically, the price action supported a move higher with the pair moving outside the box that has confined the pair over the last 7-8 trading days. The pair based against the "remembered area" at the 1.52386--43 level and that was a bullish clue.
The move higher had the 1.5288 level (high from Sept 24) and then the key 200 day/38.2% retracement as the key targets at the 1.5317-19 level (this level was outlined in my video from Monday - CLICK HERE) . The 38.2% is 1.5317. The 200 day MA is at 1.53187. The high today came in at 1.53145. With two key technical levels at the same level (well 2.0 pips separates), it is too tempting for the market to NOT sell against them, with a stop above on the first look. The price has dipped to back to a low at 1.5294.
What next?
The upside level of 1.5317-187 is still a key target. Can it be broken? Favoring a break is that the range for the day is 98 pips, while the average is 114 pips. So there is some room to roam. A second reason might be that the range for the week is 181 pips. Looking at the chart below, we are coming off the lowest trading range of the year last week (and lowest range going back to last summer when World Cup and summer holiday's kept the world in check). Non trending has the potential to transition to trending so that too would suggest there is room to roam - on a break.
The sticky point is the two levels area seen and followed by many traders so there will be the sellers/partial profit taking sellers with stops above, but a push above and it is off to another leg higher. The 1.5363 and then 1.53823 (50% retracement level) are the next upside targets.
What do longs NOT want to see now? What would show that shorts are taking back control? Looking at the 5 minute chart, the 38.2-50% of the trend move up TODAY (from the 1.5240 level) has the 38.2-50% correction zone between 1.5278 and 1.5287. The September 24 high comes in at 1.5288. This area should find support buyers on dips if the buyers are to remain in control. . .
The nut needs to be cracked. It is proving to be a tough nut to crack.