Near 100/200 hour MAs and 50% of the week's trading range
The GBPUSD closed last week near 1.4183. The high for the week reached up to 1.42493 on Tuesday. That high took out the high price from February 2021 at 1.4240 (not shown), but only by 9 pips. The move also took the pair to the highest level since April 2018.
The break higher was not to be, and helped to start a trend move lower to the Wednesday swing low at 1.4107. That level was within a swing area between 1.4110 and 1.4152 (see black numbered circles. That area was home to other swing levels both on Thursday and Friday).
The bounce on Wednesday, then took the price back up to retest its 100 hour moving average (blue line). On Thursday, the price ultimately broke that 100 hour moving average on its way back up to another well tested swing area between 1.41937 and 1.4200. The high price reached 1.4203, failed on the break, and reversed sharply lower, breaking to a a new low going back to May 17 on the move.
Traders consolidated on Thursday and into Friday with the aforementioned resistance at 1.4110 to 1.4115 at first limiting the upside. That area was then broken with resistance becoming support.
The weaker US job report sent the pair surging to the upside. The price cracked above the 100 and 200 hour moving averages which were both converged at 1.4159.
The high price ultimately stalled at the familiar 1.4200 level - the high of the well tested swing area between 1.4110 and 1.4152 (black numbered circles).
The current price is trading just below the moving averages at 1.4159, and also below the 50% midpoint of the week's trading range at 1.41657.
So what does it say about next week for traders?
What we know is the ever since May 17 the price has been trading mostly between 1.40986 (call it 1.4100) and 1.42193 - a relatively narrow range. There have been moves above and moves below that range. However, by and large, that area defines the range.
Off the high of that range is the 1.4193 to 1.4200 area. Clearly that level has attracted a lot of interest. A move above it in next week's trading, and I would expect more upside momentum -including a break of the 1.42193, with a run to retest the Feb high at 1.4240 likely. Get above that level for the 2nd time, and the pair should look for more open road ahead.
On the downside, the 1.4100 area up to 1.41153 are swing low targets to get to and through. Get below them, and I would expect a retest of the low at 1.40822, with a break leading to open road to the downside.
In between sits the hourly MAs and the 50% which will act as pivots for the buyers and sellers. Trade above those level (above 1.41657) and the bias is to the upside.
Trade more comfortably below, and the sellers have the strongest hand (and the most control).
Overall, the range this week of 166 pips is ok, but it is also the range for the last 15 days (3 weeks). That is not so ok.
The price action is non-trending in an up and down choppy price range. At some point, that storyline will change. Non-trending will transition to trending.
With 15 days of non-trending, traders will soon decide "Is the GBPUSD going higher and continuing its post-Brexit recovery?". PS the 50% of the range since the 2014 high is at 1.4300 and the 2018 high is a t 1.4376, both are the next targets (see weekly chart below) and could both be tested next week.
Alternatively, the market may decide, that sniffing the 50% retracement at 1.4300 is good enough (the high reached around 1.4250 this week) and instead look to rotate back toward the 38.2% retracement on the weekly at 1.3617 over time (or toward that area).
The technical storyline is set. Traders will be looking for the break and run and for the market price to get out of this up and down trading range.