Price approaches some key support targets
The GBPUSD broke higher last week, extending above a topside swing area between 1.3801 and 1.3811. The successful break and test of that area on Monday said the price up nearly 200 pips with the pair peaking at 1.40084 (just above the 1.4000 level) yesterday. However, with the did not be sustained in price trended lower in the London/North American session yesterday (closing near the session lows).
The price action was more choppy in the Asian/London morning session, but the last few hours has seen the price moved to new session lows on the day and continue the selling momentum seen yesterday.
The pair just broke through the 38.2% retracement at 1.38964 (as I type), and tests a swing area between 1.3888 and 1.38948. The rising 100 hour moving average of 1.3883 is also coming into play. A break below that level would weaken the technical picture and have traders looking toward the 50% midpoint of the move up from the April 16 low at 1.38619. The first test (the low just reached 1.38847) has seen willing buyers. Holding sets up a battle with the buyers and the sellers. It would take a move back above the 1.39175 level for the dip buyers to feel more confident about the bottom. In between is the 38.2% at 1.38964 and the important 1.4000 level as well (watch 1.4000 for potential intraday resistance now).