The GBPUSD is confined to a 60 pip trading range today. That compares to a 145 pip average over the last 22 trading days. There is some consolidation of the gains from yesterday.
Looking at the hourly chart, yesterday the price based against its 100 hour moving average (similar to the EURUSD). Holding that moving average level gave the buyers the confidence to push higher. The moves higher GBPUSD yesterday were also helped by overall USD selling. Some weaker data (initial claims, Philly manufacturing index, existing home sales) and lower bond yields helped to push the greenback lower (and the GBPUSD higher).
The run higher yesterday in the GBPUSD, was able to get above the 1.2500 level which were near the swing highs from Tuesday and Wednesday. The price also extended above the 38.2% retracement of the move down from the April 21 high at 1.25116 (PS. The April 21 high was the start of the trend move down which bottomed last Friday at 1.21543. That was the lowest low going back to May 2020).
The move above the 38.2% retracement yesterday was short lived, however, and the price rotated to the downside into the close (back below the 1.2500 level).
Today, the low price in the Asian session bottomed near a swing high from Wednesday and Thursday near 1.2437 (the low price reached 1.2436). The price high today stalled at 1.2496 which was just below the 1.2500 highs from Tuesday and Wednesday and comfortably below the 38.2% retracement at 1.25116.
So buyers are leaning against short-term support and sellers are leaning against the 1.2500 level and the 38.2% retracement.
Ultimately if the buyers are to take more control, they need to get and extend above the 38.2% retracement. That is a key upside target to get to and through. Getting above the 38.2% - and staying above - is the minimum retracement target that proves the counter trend traders are gaining traction.
On the downside, a move below the 1.2437 level will have traders looking again toward the rising 100 hour moving average at 1.2411. Move below that level and the door opens for further selling especially after bottoming there earlier this week.
