The pair trends lower and lower but there is a pause for cause
The GBPUSD has tumble and trended lower with nary a correction along the way. However, the pair has found a level that may give the market a bigger cause for pause.
- The 200 hour MA comes in at 1.40637 (green line in the chart above).
- The 50% of the move up from the March 16th swing low comes in at 1.40654.
- The low price just reached 1.40656, right against those key technical levels.
The price has bounced to 1.4090. Is the bottom in?
Looking at the 5 minute chart, the trend move is evident. The price had a minor correction that took the price up to 1.4175 before taking the next big step lower. The last move lower, pushed below the 100 hour MA at 1.4148 and moved down to the 200 hour MA (see green overlay on the 5 minute chart below) and bounced. Of course the 50% was also there, but is not shown.
The correction off that low has the 38.2%-50% of the last trend move lower at 1.41077 to 1.41207. That area (yellow area in the chart below), will now be eyed as a proxy for buyers and sellers. Stay below on a correction and the sellers are still taking it to the buyers (and are in control). Move above and the buyers and sellers are showing more balance. It might not be the end of the move lower (over time) but it muddies the water. Time to be less trendy.
Does it make buying against the dual support level (at 1.4637-65) wrong?
Absolutely now.
That level is support for two technical reasons, and it could easily be the low for the day.
However, because the market is trending (i.e., the corrections of legs lower are very limited), a move below those levels is not a good sign for buyers (no matter how low). I would give a few pips, but not much.
Trends are fast and directional and can go farther than you expect. So it might make sense to put a toe in the water, but if you fall in (i.e. continue to break), I look to get out as it is a sign that the trend is continuing.
