Anything can happen in the GBPUSD. So watch the technical clues
Most might agree that with the clock ticking to Brexit and lots of balls still in the air
- Does the lawmakers request Article 50 extension?
- What are the reasons?
- ow long? Do they get an extension?
- Do they have a new referendum?
- Do they have an election?
- Does the EU27 grant an extension?
- Is there some solution to the backstop that has so far eluded all the lawmakers?
- Does PM May ever get her voice back?
- Etc.
The one thing that seems to be ruled out for the day is that the lawmakers will not vote for a No Deal Brexit today.
So what to do as a trader?
If in the market trading the GBPUSD, you have to rely on a little luck ....yes... but also take "market" clues from simple technicals. To trade without stops is not a good idea. To trade the away from technical levels is also not a great idea.
Will you have the potential to be wrong? Sure. With all the balls in the air, I don't think anyone has a crystal ball as to what the answers will be... let alone the "markets" price reaction.
So what do I see now?
The GBPUSD could not get above the 200 hour MA after the vote yesterday. Today the pair has been able to climb that mountain (above the green line). Earlier the clue for traders, was the re-break above the 100 hour MA (blue line). The holding of that line was another clue for the bulls/buyers (see chart above). Traders who trading that price action clue, are looking pretty now.
If you don't like the long side, like it or not, you still need to see a break back below the 200 hour MA. Right here, with the price at 1.31618, the buyers are still more in control and moving away from that MA risk defining level.
On the topside, targets for the bulls would be to get and stay above the 1.31696 swing high from Monday and then the 61.8% at 1.32003 (that is also a natural resistance level of course). That should be a tough nut to crack.
Drilling to the 5 minute chart below, the pair is trending higher. A lower trend line was tried to be broken without much momentum. I can argue that a move below the 50% of the last leg higher (from around the 200 hour MA) at 1.3152 would be an intraday tilt to the downside which may lead toward a retest of the lower 200 hour MA (at 1.31363). That retracement moves with new highs.
