Is it just sympathy with dollar?
The UK headline retail sales today came in at +0.1% vs +0.4% estimate...not so great, but ex auto and fuel it reached its expected goal of +0.4%. OK.
The price action for the GBPUSD moved lower into support against the 200 hour MA (green line in the chart below), the trend line support (see 1, 2, 3 blue circles), and the 38.2% retracement of the move up from the August 7 low. Buyers on dips against risk defined support showed up.
The subsequent rally, has taken the pair back above the 1.5636-49 area (yellow area) and the 100 hour MA (which cuts through that level). The 1.5636-49 area had a number of swing highs going back to July 15th (you can look for yourself on your hourly chart). Yes there were a lot of breaks too, but most of those breaks - until the last few days - have been pretty quick. The time spent above this area may be a "tell" that the pair is more supported. Is it just dollar weakness? Will UK face the same dynamics thus limiting the upside?
So how will we truly know if the buyers can will push higher? Simple. Buyers remain in control by staying above the yellow area. Being more specific, stay above the 100 hour MA (blue line in the chart above). This level will be eyed closely (by myself at least). Stay above and all is ok with the bullish bias. Move below and the waters get muddy again for the buyers/bulls (risk level).
