Needs to break the ceiling in order to march higher
The GBPUSD rose sharply on the back of better employment and the MPC meeting minutes (see: The pound is off to the races after jobs report and MPC minutes).
The move took the pair to the highs from Monday's trading at the 1.5439 level where the move has stalled. The correction has been modest off the top. However, the ceiling is keeping a lid on the pair.
Looking at the hourly chart the ceiling at the 1.5439 level is holding the gains so far Needless to say a move above the ceiling is needed to keep the upward momentum going. On the downside,traders will be eyeing the 1.5401 area as a support level to buy against if the buyers are to remain in control. The level represents the:
- High from yesterday
- A natural number that tends to attract interest, and also the
- 38.2% retracement of the move up today (not shown at 1.54016).
A move below the 50% of the days trading range at 1.5389 area would be the risk.
The market seems to be looking for another currency they can buy that is not the USD. The GBP seems to be that next candidate in line at the moment. As such, the pair has rallied 450-500 pips off the lows from January at 1.4950 area (see daily chart below)..
Looking at the daily chart, last week the pair broke above a downward trend line, but is having some apprehension above and below the 1.5400 level. The price is above the 50% of the move down from the November high at the 1.53874 level. This level is another risk level on the downside for traders today (close to the days 50% level on the hourly chart).
Targets on the topside from the chart comes in at the 1.5490 level (61.8% in the chart below) and the topside trend line at the same area. Above that level and there is not a lot of resistance until the 100 day MA (blue line in the chart below). That level comes in at the 1.5616 level currently. This is not a realistic target today but certainly can be a target to shoot for over the next few days of trading if the buyers can remain in control. The price of the GBPUSD has not traded above the 100 day MA since early August 2014. .
US Housing starts and PPI was lower than expectations. Perhaps the buyers will reemerge and push the price above the ceiling.
