38.2% retracement holds support. The high from yesterday stalls the rally.
The GBPUSD accelerated higher yesterday after the Scottish election results over the weekend. The pair moved to a high 1.41573. That was the highest level since February 25. The high for the year was on February 24 at 1.4240. The pair is still a ways away from that high. Nevertheless, it remains a key upside target on further upside momentum.
Also important in the longer term is the 1.4300 level. Looking at the weekly charts, the 50% retracement of the move down from the 2014 high price comes in at 1.42996 (call at 1.4300). Since June of 2016 there've only been two weeks when the price moved above the 1.4300 level. Key level to keep in mind should the upside move continues.
Drilling down to the hourly chart below, the pair is consolidating the gains seen yesterday.
Technically, the high today stalled near the high from yesterday. The low today stalled near the 38.2% retracement of the last trend leg higher also from yesterday. That retracement comes in at 1.41026 (just above 1.4100).
The current price trades at 1.4142.
So traders have defined a range with the 38.2% retracement as support, and a double top the 1.41573 as resistance.
The tilt remains in the favor of the buyers. The price has trended higher since the low on Thursday near 1.3856 (over a 300 pip rally), and the correction has only been 38.2% of a portion of that move. That is pretty plain vanilla.
However, traders can also fall in love with double tops after big moves in short periods of time. Risk can be defined and limited. Trading can consolidate or even correct lower without losing the bullish bias.
So it will take a new high with momentum to give the pair the next shove that could see a run to new highs for the year AND the key 1.4300 level. A break of the 1.4100 level should also lead to more downside probing. Buyers and sellers are looking for the next shove.