Bullish/Bearish barometer for the GBPUSD

The CPI has come and gone. It was a bit weaker than expectations and the dollar has fallen but is respecting technical levels in both the EURUSD and the USDJPY (see post here).

The FOMC decision is later today and will be the next key event for the market.

Looking at the 4-hour chart of the GBPUSD below, there is a key area that sticks out in the pair. That area is the barometer for bullish above and bearish below.

The 100 bar MA on the 4-hour chart (blue line) comes in at 1.3372. The price fell below that MA line on Monday. Yesterday there was a move above. However, the break was short lived and the next bar on the chart tested and held below the level. Today the high price reached 1.33676 so far, and backed off.

Also near the 100 bar MA is a broken trend line at 1.33807 (and moving higher). It too was broken below on Monday, and tested yesterday (the move above failed).

That area - between 1.3375-807 - is the barometer for bullish above and bearish below for the GBPUSD today. Right now, the bears are keeping control. I would look for a test before the FOMC to find sellers for a trade before the decision and press conference (with stops on a break above).

Targets for the downside include the:

  • 1.33188 (low from last week)
  • 1.33938. 50% of the move up from the November 3 low
  • 1.32698. 200 bar MA on the 4-hour chart

On a break above the 1.33807 level will start the retrace of the declines seen this month.